What the Beatles' early failures can teach you about staffing, timing, market research, and product development.
The words "failure" and "the Beatles" seldom appear in the same sentence. But the Beatles' early career was actually a series of failures--a record that culminated in their unsuccessful audition with the leading record company of their era, Decca Records. This particular failure nearly caused the band to break up.
At the time of Decca's rebuff, the Beatles had been performing under various monikers for nearly five years. Faced with that kind of rejection, most bands would have returned to Liverpool, gone back to their run-of-the-mill day jobs, and continued to play occasional gigs. But the Beatles were not like most bands.
And you should not be like most companies. Setbacks on the path to success are inevitable. What matters is whether you allow them to build you up or tear you down. Be like the Beatles. They ignored the alleged musical experts, internalized their failures, and improved their value proposition by working their asses off.
Here are start-up lessons you can take from the Beatles' biggest setback.
Lesson #1: Know your product.
The material for the Decca audition was selected by the group's manager, Brian Epstein. Brian's musical qualifications? He curated the record section in his father's furniture store. Of the 13 songs the band played, 10 were covers of American tunes, which the Beatles sang with exaggerated American accents.
Brian's intent was to showcase the group's multi-generational appeal by drawing upon mainstream songs, including Broadway show tunes. Brian only selected three Lennon and McCartney songs for inclusion in the audition. Notably, the Beatles never released these original compositions; they didn't make the cut.
What can you take from this? Adviser input should not be unequivocally treated with reverence. You must know when to listen to your advisers and when to reject their well-meaning advice. Sure, advisers are helpful--and necessary--but they don't know everything. Do your homework.
Lesson #2: Know your audience. When band members looked back on the audition in later years, they realized they were ahead of their time. Per George Harrison, "It was unusual at that time to have a group where everybody did the singing. In those days, it was... one guy out front who sang." John's recollection was similar: "When they listened to these audition tapes, they were listening for The Shadows. So they were not listening at all."
Understand the potential investor's point of view, and don't try to change it. You'll be spinning your wheels. Instead, focus on wooing investors whose POV is aligned with your venture's value proposition. Ignore the rest. You're not going to change their minds.
Lesson #3: Gather the right team. The Beatles' ultimate lineup was incomplete at the time of their Decca audition. The affable but musically mediocre Pete Best was the drummer, rather than Ringo Starr. One of the keys to the Beatles' ultimate success was the creative tension and balance they achieved once Ringo joined the group. A start-up can likewise ill afford to compromise when establishing its core team.
Lesson #4: Timing is everything. The Beatles were simply not ready at the time of their Decca tryout. According to Paul McCartney, "Listening to the tapes, I can understand why we failed the Decca audition. We weren't that good, though there were some quite interesting and original things."
Start-ups have limited opportunities to secure key customers, investors and employees. It is very difficult (usually impossible) to recover from a bad first impression. You have to balance your desire to move fast with your actual capabilities. Get ahead of yourself and you're likely to fall flat.
Lesson #5: Know what you're getting into. Brian paid Decca £15 to record the session (equal to $42 at the time, $317 in 2013 dollars). It's unclear whether Decca's motivation was sincere or if it was an opportunity to score a small payday from an otherwise empty studio.
Your two most limited resources, time and money, must be strictly guarded. When a customer, investor, or partner makes a request, investigate. If their motives are not congruent with your goals, the opportunity should be ignored.
Lesson #6: Set expectations. Said John Lennon: "I think Decca expected us to be all polished; we were just doing a demo."
Establishing appropriate expectations among a start-up's stakeholders is imperative: Over-promising and under-delivering can be a death knell. For instance, if you deliver a prototype to a potential partner who is expecting a commercialized solution, the partnership may be irreparably damaged.
Lesson #7: Critics can be wrong. In their later years, John Lennon recounted their numerous early failed auditions, recalling, "They used to keep telling us, 'It's too much like rock and roll and that's all over now,' because they all thought rock and roll was dead, but they were wrong."
The Beatles recalled their Decca rejection with bitter satisfaction.
George: "... [Decca] signed Brian Poole and the Tremeloes instead. The head of Decca, Dick Rowe, made a canny prediction: 'Guitar groups are on the way out...'"
Paul: "He must be kicking himself now."
John: "I hope he kicks himself to death."
Not a natural optimist? Use these simple exercises to train your brain to more easily pick out the positive.
You know how when you play Tetris for awhile, even after you stop, you can still see those little falling blocks in your mind's eye?
The persistence of Tetris isn't simply an annoying effect of a cleverly designed game, according to scientists. Instead it's a reflection of something deeply positive about our brains--their plasticity.
That's a according to a recent post by iDoneThis founder Walter Chen on productivity blog buffer. He cites studies on Tetris (yes, there is such a thing, and yes, this is going somewhere helpful to non-video game addicted entrepreneurs), which found that playing the game for a few hours a week over a period of months, actually changed the brains of players.
"Every time you reactivate a circuit, synaptic efficiency increases, and connections become more durable and easier to reactivate," Chen writes, before summarizing the importance of the findings: "Whenever you do specific tasks over and over again, they take up less of your brain power over time."
Learning PositivityThat's probably not a shock to anyone who has learned to play the piano, speak a foreign language or even hit a tennis ball roughly where you want it to go. So what's the big deal? This same brain plasticity allows you to master simple skills or sports, also allows you to train yourself to be more positive.
Chen quotes Shawn Achor, the author of The Happiness Advantage who has previously spoken about his work on the brain and happiness to Inc. Just like we can train our brains to more easily recognize the patterns of Tetris, “we can retrain the brain to scan for the good things in life—to help us see more possibility, to feel more energy, and to succeed at higher levels,” Achor says, dubbing this ability "the positive Tetris effect."
Happiness HomeworkSo how do you do this? Chen offers four very simple interventions that can, over time, actually rewire your brain to see things more positively:
Looking for more details? Chen's post has much more on the science and what actually happens physically in your brain. You can also check out Achor's interview about how happiness affects brain function (hint: it doesn't make it worse), or get tips on how to reframe situations more positively in the moment from my colleague Geoffrey James. Finally, if you're looking to add more mindfulness to your day, check out this post on how many entrepreneurs incorporate meditation into their lives.
Do you agree that it's possible to alter you basic orientation towards the world and become more positive?
Forget your best friend. Working with someone who drives you crazy is more likely to help you achieve your dreams.
When you think about founding your dream business, you might imagine working side-by-side with your best friend, or your spouse, or your sibling. You love spending time with this person. You feed off each other and have such great ideas. It will be awesome.
Or maybe not. Maybe what you should do is work with someone who drives you insane.
It works for Discovery Channel Mythbusters Adam Savage and Jamie Hyneman. They do, by all accounts, great work. But, they are not friends. They do not hang out together and, according to Adam, they drive each other crazy.
So, why does the relationship work? Because they respect each other. And that is the critical piece. If you respect someone you don't need to like them in order to have a successful working relationship. It can even be a benefit. Here's why.
You like different things, so you see different things. When your business interests and your outside interests are similar, you'll both focus on the same things. You'll see the same side of every problem. While this makes for pleasantries and warm and fuzzy feelings, it can also cause you to miss things--big things.
A partner, or an employee, whose viewpoint is different from yours will see things you cannot. She will see areas that you are weak in and you will see areas where she is weak. You will see different things and this is beneficial.
You're not distracted by social lures. You don't stop working on a project to plan your weekend activities. Your relationship will be built around the business and the business only.
It's easier to terminate a relationship. I have received numerous emails from people who desperately want to leave the family business, or who no longer want to work for their best friend, but cannot because they are terrified of damaging the relationship. Likewise, I've received emails from people whose best friend is not doing a good job, and they want to fire and replace that person, but won't go through with it.
If your relationship is purely business, if it's not working out, it's easier to part ways. If your partner wants to take on a new job, you say, "Great idea! I wish you the best of luck!" and there is no angst over it.
While this may seem like a silly, little, thing, the stress reduction from having purely business relationships is tremendous.
Smart is better than yes. You need to surround yourself with smart people. People with great ideas. Not necessarily with people who you'd like to go to lunch with. Great ideas can come from all sorts of people. Someone who challenges you makes you think harder. Someone who will say, "But..." and will point out the flaws that you'd otherwise overlook.
Respect is key. If you are so annoyed by this person that you are yelling, the business relationship won't work out. You must respect each other. You must be polite. You must listen to what the other person has to say. But, you don't need to be friends.
The next time you are looking to hire someone, or partner with someone, look for someone who has great ideas and thinks differently than you do. In fact, you may wish to look for someone who, like Jamie Hyneman does to Adam Savage, drives you nuts. If you are as successful as they are, you'll be off to a great start.
Let’s get this right: mobile ads suck.
And if you’re planning to have that as your revenue model, you are throwing your app into a gorge unless it’s a really kickass application that people can’t do without. Chances of the latter being very thin in a very competitive world, today, it would be prudent to think of other revenue streams than mobile ads.
You’ve probably heard this a million times already but here’s it again: Facebook’s mobile monetization model was decreed “not-so-convincing enough” to encourage investors to turn the IPO into a massive success. Instead, it turned out to be a flawed scenario resulting in valuable lessons about mobile ads.
Facebook is one of the few popular companies that haven’t yet solved the puzzle of mobile revenue models. There are plenty of small-time developers and companies who are still struggling to figure out how their mobile apps can generate acceptably decent revenues.
1. Real Estate
First off, there’s this huge difference between a mobile screen and the desktop screen. There’s so much less real-estate on the mobile that the content itself is shrunk. Now, if you’re going to put some ads in between, on top, at the bottom or anywhere else, that’s going to steal under broad daylight very valuable space on the small screen. It drives people mad. We, as users, don’t like that at all.
2. Banner Blindness
People are getting used to banner ads. This is a generation that has seen a lot of banners in online advertising and we’ve grown immune to these. Mobile ads that aren’t disguised within the content – and that don’t provide relevant and intensive value – are easily filtered out and completely ignored. This is why there isn’t much to be made out of mobile ads as a revenue model (lower eCPMs)
Users are looking for a high level of value on the mobile platform than on desktop. The mobile being a very personal gadget, users have this subconscious feeling that their experience with any content (in the form of an app) shouldn’t be diluted, disturbed or contorted by ads.
Valuable content holds the key to connecting with your users and anything that mars this experience even by a tiny bit kills the chances of establishing a connection with your users.
With so many paid apps doing great, it’s clear that people prefer paying once to remove ads than to experience a free app filled with ugly ads.
Sure, mobile ads do suck and mobile eCPMs are pretty weak compared to their desktop counterparts. But there are various other alternatives that you can think of. Some of these are being successfully implemented.
From the users’ point of view, mobile ads are definitely not the way forward and if users aren’t going to be interested in it, you won’t find publishers either. Thinking of mobile ads as a revenue model? Time to rethink your strategy.
Image © TechCrunch
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Hailo announced it raised a new $30 million round of funding led by Union Square Ventures. Here's what that means.
As taxi-hailing-app maker Hailo attempts to tackle the crucial New York City market, it has investor Fred Wilson on its side.
The London start-up announced Tuesday that it finalized a December deal that raised $30.6 million led by Wilson's Union Square Ventures (think: Twitter, Tumblr, Kickstarter). British mogul Richard Branson and Japanese telecommunications company KDDI also chipped in for the round.
Wilson seems to have had his eye on Hailo for a while; last year Jay Bregman, the company's CEO and co-founder casually told me that Wilson had described Hailo as "Foursquare for taxis."
Reached on the phone Tuesday, Bregman laughed when I referenced that phrase. He explained that he'd met with Union Square Ventures twice in December. In the course of pitching his company, and explaining how it differs from other ride-hailing companies in the aggressive and growing space, Bregman said Wilson stopped him, by saying, "I got it, I got it," followed by that line: "It's Foursquare for taxis."
With this latest round of funding from Wilson, Hailo has raised almost exactly the same amount as fast-growing ride-hailing company Uber. Both have about $50 million total invested. But the new round reportedly values Hailo at roughly $140 million--half what Uber was valued at when it closed its last round a year ago. (Hailo operates its taxi-hailing technology in nine cities; Uber offers its taxi-hailing service in five, and its sedan-hailing in more than two dozen.)
Founded in 2010 by a group of four friends in London, Hailo has thrived there. It's reportedly used by more than 10,000 drivers and its app has been downloaded by 225,000 potential passengers. The company raised a series A round of financing last year from Accel Partners (backers of Facebook and Dropbox), Wellington Partners, and Atomico (a fund created by the Skype founders).
Bregman's first dive into entrepreneurship was in London, after he finished graduate school. He founded a logistics company and delivery-business called eCourier, which is recognizable due to its big purple vans.
"We developed some scheduling algorithms to boost the efficiency of the deliveries, and learned a lot of hard lessons about how to create an on-demand transportation marketplace," Bregman says.
But Bregman was born in New York--and couldn't be happier to be home. He's been working for months now out of Hailo's shared office space at WeWork in the Meatpacking District, and planning for the New York City launch of Hailo, slated for the middle of this month.
Uber is likely to start its taxi-hailing service about the same time. Both are part of a year-long pilot program established by New York City's taxi commission to allow digital dispatch of taxicabs. GetTaxi and Flywheel (the start-up formerly known as Cabulous) are other contenders that also provide technology to let passengers locate, secure, and pay for taxicab rides from smartphones.
Wilson noted on his blog that Hailo released data Tuesday, including the fact it has 5,000 cab drivers already signed up in New York.
In cities where cab fares are relatively expensive (say, Dublin and London), Hailo takes a percentage cut--usually roughly 10 percent--of the already-high fare. Here in the United States, however, Hailo plans to simply charge a "Hailo fee."
"It's like tipping the doorman at the hotel," Bregman says. "You know what you're going to pay when you open the app."
Bregman says he considers Hailo more of a benefit to taxicab drivers than to passengers. It's not only a payment platform and fare-finder for drivers, but also gives them maps--and a sort of social-network of other drivers, letting them share tips about locations in real-time.
You know, like Foursquare.
Want to gain confidence, wisdom, and leadership skills in record time? Go to work for a floundering company.
If you've never worked for a floundering company, you don't know what you're missing.
I'm serious. Nothing will prepare you better to lead. And nothing will prepare you better for life.
I've worked for a number of companies that, at one time or another, found themselves on the ropes and, you know what? I learned more about business, management, and leadership trying to help those companies fight it out with giants like Microsoft and Intel than all the rest of my experience combined.
The truth is that working for troubled companies brings out the best in people. It creates strong, resilient, adaptive leaders. Here's what you'll learn by working for companies that have to slug it out with market leaders while on a shoestring budget:
How to drink from the fire hose without drowning. When you're understaffed, underfunded, and losing money every quarter, nobody's going to wait around for you to figure things out. Your customers have better things to do. So do your competitors. These days, markets are constantly changing. Everything moves at lightening speed. There's always too much information and never enough time to breathe. Better get used to it.
You can find your home. If there's a test for knowing if you're in the right place, it's when the company you work for is in deep trouble and everyone's got to sacrifice, pitch in, and fight. If you still love getting up in the morning and going to work under those conditions, then you've found your home.
You know what great leadership really is. Chief executives don't usually get fired when things are going well. They get canned when times are hard and the board figures out what they're really made of--and it falls short of their expectations. When business is floundering, that's when the rubber meets the road. That's when you can really tell if the company's leadership has what it takes: the guts, the smarts, and most of all, the resilience.
The miracle of market segmentation. One of the most powerful techniques in marketing is called market segmentation. We can't all be market leaders, but we can all find unique market segments and focus on leading those. It's all about positioning your product in a niche you can dominate, and then growing from there.
How to win no-win situations. When you're outmanned and outgunned, you always end up having to troubleshoot seemingly impossible problems. When you're pushed so hard that your back is up against a wall, that's exactly when you'll rise to the occasion and do your best work. That's right: necessity really is the mother of invention.
Guerilla warfare. Let's face it: You don't learn how to be scrappy, how to be crafty, how to do more with less, while working for the industry leader. You learn all that by working for an upstart that has to scrape and claw for every point of market share and every product feature with a fraction of the resources that the big guys have.
How tough and adaptive you really are. More than anything else, working for a company in trouble teaches you about yourself. You learn what you're really made of. What you're capable of doing when everything's on the line and everyone's counting on you. That's why troubled companies really are gold mines. They're opportunities for you to step up to the plate and take risks.
You'll gain confidence from your successes and wisdom from your failures. Most of all, you'll grow into whatever it is you're capable of becoming.
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A fascinating article on "emotional labor" argues against companies coercing staff into feigning cheerfulness. Is it OK to pay workers to pretend to be happy?
You go into a fast food shop or a shoe store. What are you expectations for the staff member who serves you? Politeness, sure. Knowledge of the products on offer and efficiency in getting you want you want? Fair enough. But how about a big smile and a sunny disposition?
As a consumer your initial response to this last requirement is probably, yes please. Of course it's nice to have service staff behave like they're thrilled to be at work and our mere presence in their establishment has genuinely brightened their day. But as a business owner, is it a good idea to actively require your employees to express joy at work, even if it's feigned?
That's the question posed by a fascinating recent article in the New Republic. Looking at the sandwich chain Pret a Manger, Timothy Noah argues that there's a dark side to forced cheer at work. Pret, Noah reports,
Keeps its sales clerks in a state of enforced rapture through policies vaguely reminiscent of the old East German Stasi. A "mystery shopper" visits every Pret outlet once a week. If the employee who rings up the sale is appropriately ebullient, then everyone in the shop gets a bonus. If not, nobody does. This system turns peers into enthusiasm cops, further constricting any space for a reserved and private self.
So what's wrong with paying employees for "emotional labor" as well as simply slinging sandwiches? While empathy for pay may be a legitimate part of some professions, Noah feels introducing it to gigs where its not strictly necessary is a little sinister:
Emotional labor is not itself new. Prostitutes have faked orgasms for millennia. With greater sincerity (one hopes), undertakers calm the grieving, nurses comfort the sick, and migrant nannies lavish on other people's children the love they aren't present to furnish back home…
In all these instances, emotional labor served (legitimately or not) identifiable emotional needs. That's not true at Pret. Fast-food service is not one of the caring professions. The only imperatives typically addressed in a Pret shop are hunger and thirst. Why must the person who sells me a cheddar and tomato sandwich have "presence" and "create a sense of fun"? Why can't he or she be doing it "just for the money"?
Or, as Noah puts it elsewhere in the article, "Pret doesn't merely want its employees to lend their minds and bodies; it wants their souls, too." His concern, evidently, is that demanding cheer is demeaning, exploitative and dehumanizing, but psychology blog Mind Hacks, which commented thoughtfully on Noah's piece, notes that forcing people to fake emotions also has negative practical consequences.
Acting happy when you don't genuinely feel happy, creates "emotional dissonance" that "leads to burnout, low mood and poor job satisfaction," notes the blog. And monetizing emotion can cut into an employee's sense of the intrinsic value of their job. "It has the capacity to denigrate genuine compassion as ‘required labor,’" concludes the post. (For a deeper dive into the question of what areas of life shouldn't be invaded with the market logic of buying and selling, check out this fascinating essay from Michael J. Sandel.)
Meanwhile, researchers have also cast doubt on the long-term efficacy of "forced fun" at work, finding that required levity can lead to an array of bad outcomes such as burnout among employees, and that these cheerful work cultures often serve to distract workers from excessive control or poor conditions elsewhere in the business.
Do you think its right to require employees to be happy at work?
Users will hand over a lot of data to an application, sometimes without even noticing that’s what they’re doing. Unless you’re working with a particularly savvy group of users, the only time your users will pay attention to what information they’ve provided is when something goes wrong. You have to make the decisions to protect them and minimize those problems ahead of time — a smooth experience means that you can land and keep more users.
When you’re considering what information to ask your users for in the first place, and what you need to save, there is a simple rule to stick to: ask for as little as possible. It’s tempting to ask for a lot of data; after all, you can do all sorts of analysis and use it to help you land even more customers. But the reality is that you usually don’t need all that much information for an app to actually work. Since you can’t really predict when you’ll get around to that big analysis project, why ask for data you don’t need yet? You can always get some of it with a customer survey later on, plus perhaps some more useful information.
Go through what fields you’re considering asking your users to fill out when they sign up. Eliminate everything you can — it’s not a bad option if you’re only asking for an email address and a password. Heck, you might not even need that. The same goes for what information you’re collecting that your users might generate. It’s much harder for a security vulnerability to expose information that wasn’t actually saved.
Financial details, like credit card numbers, are in a class of their own when it comes to keeping them secure — there’s so much more incentive for someone to try to get ahold of such information. If you’re selling something, you’re going to have to accept payments in some fashion. In general, it’s a good idea to make credit card numbers and other financial data someone else’s problem.
Handing the issue over to a payment processor that has already invested their resources into safeguarding payment information will make your life easier, but it can also make you appear more trustworthy to your users, especially if they recognize the payment processor you’ve chosen.
Just what your legal situation is when it comes to storing data about your users depends greatly both on where you’re based and where your users are based. In the U.S, for instance, there are laws specifically governing what information you can store about minors, particularly those under the age of 13, as well as about financial and medical data. Do your research so that you don’t have to deal with a legal problem right off the bat.
Security and privacy issues are only going to get more press in the future, so invest whatever you need to make sure that you’re saving user information correctly and safely.
Image by Flickr user Daniil Vasiliev
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