The Power of Simple
Over the last few months I’ve been thinking a lot about a framework for the way I look at the world. I think it applies across both personal and professional facets of life, and across a multitude of layers within these buckets. The irony is that this worldview with seemingly infinite reach is inherently not complex; rather, it’s that there is Power in Simple.
Before I go on I want to acknowledge two things up front: 1) I’m far from the first person to opine on the incredible power of looking at things in a simple light. My hope is not to come off as some guru of life philosophy, but rather to make a few meaningful points about how simple is good with respects to entrepreneurial companies. And 2) I recognize that a mantra like there is Power in Simple makes me sound like either a grizzled octogenarian or a New Age theorist who’s about to pimp a balance bracelet of some sort. I happen to be neither, and hope you won’t hold that against me.
There’s no doubt in my mind that the development of my simple is better framework has been influenced in large part by the Lean Startup movement and focus in certain tech circles on Minimum Viable Product. Folks like Eric Ries have done a great job of introducing the idea that, especially in SaaS and web-based start-ups, agility and ability to make rapid changes are paramount. It’s not necessary to build the perfect product before releasing to the public. Rather, it’s better to release a minimum viable product - one which has been developed in a leaner, less costly manner – and then iterate continuously over time based on market feedback to make the product better and better.
You don’t have to have a product development background to grok the idea of MVP both as a user and on a theoretical basis as the most efficient way to develop online products in an age when releases can be instantaneous and mistakes reversed with huge economic implications. Yet, as you dig deeper into MVP, there is a tendency to be overwhelmed by all the information and suggestions out there. And then there’s the counter argument – that there are times when the fat start-up is more appropriate. Then you’re putting together your investor deck to pitch for a round of funding and resort to vomiting out the entire potential product roadmap in an attempt to showcase all your product could be over time.
And what do you have to show for it? A convoluted amalgamation of ideas that are nearly impossible to decipher for an investor and even less coherent for you as the operator as you try and determine how to direct limited resources in the most effective way.
The answer, I think, it to get back to the simplest of all questions: At the most basic level, what is the market pain or new value that you’re trying to create. Why does your company need to exist?
By framing your complicated world in the simplest manner, it’s possible to then classify next steps with a new, clearer lens.
I was reminded of the power of simple last week when I listened to a talk at NYU by Albert Wenger of Union Square Ventures. Albert talked a lot about how USV uses a thesis-driven approach to their early-stage Internet investments. They establish theses for the way the world is changing and then look for companies who have launched and grown a user base with a mission that fits in with one of their theses.
A great example of this thesis-driven investing in action was the firm’s investment in Etsy, the online marketplace for handmade goods. USV believed that there would be a growing market for unique, one-of-a-kind products that were completely different than the mass-produced items one could find at Wal-Mart or Amazon.com. Now there are a million questions one could ask about the Etsy model – exactly how big is the market, how would you build sellers to scale, what is the right transaction fee structure, how could they compete with eBay – and those questions have undoubtedly been asked and debated ad nauseam. But at the core, Albert and USV made a bet against a thesis which is proving to be true, and Etsy is growing rapidly (and adding features along the way!)
Of course, living out a simple is better framework is not just for visionary investors or founding CEOs. The fact of the matter is that every member of a company’s team is responsible and capable of living out this mission in real time. At Square 1 Bank we exist to provide banking services and debt financing that help venture-backed companies grow. At our very core, our goal is to grow outstanding loans while minimizing losses. I can go on and on about the best ways to accomplish these goals – about the implicit contract between VCs and lenders and theintricacies of covenants and why this or that internal process is good or bad. But at the end of the day, I’m realizing more than ever that my daily actions should really be driven by a simple framework: does this increase the likelihood of making more loans without exposing the Bank to undue risk? If so, it’s likely a good action to continue repeating.
I’m interested in how others – both those creating new products/companies and those in non-product manager roles - have adapted the simple is better approach. I hope you’ll contribute to the discussion in the comments below.
