Alex Kehayias's Blog

6% Better than Twitter

The past two weeks I’ve been doing lots of pitching and am reminded just how important the question “what makes you unique?” is so important. If you’re answer is not a narrative about how you’re 10 times better than anything else the world has to solve a problem you will lose. 

Incremental Improvements vs 10x Game Changers

When I was in DC last week I had a chance to see Dan Yates from opower present. He talked about the power of incremental improvements and how in the macro world they can represent a huge opportunity. For opower that means reducing power consumption for it’s clients (power companies) by 6%. Very different than a clean tech startup that is trying to replace power plants with solar/wind/whatever. That small change, in aggregate, is a huge improvement and they are able to capture some of the value they are creating (profit).

Then there are consumer web startups where an incremental improvement of 6% over anything is laughable. Imagine someone pitched their startup to you as “I’ve built a product that’s 6% better than Twitter.” You just can’t get excited about an incremental improvement when the web is this crowded. In one of Peter Thiel’s class note essays (go read all of them), Peter talks about dominating markets and becoming the last mover. Competition leads to incremental improvements. Domination comes from 10x game changers.

Don’t Compete, Dominate

There are plenty examples of incremental improvements leading to big impacts (Edison’s light bulb is an incremental improvement over what existed), but in the crowded world of web startups I feel that incremental won’t cut it. If you want to dominate you need to be a 10x improvement. Obviously if you’re not solving the right problem you can be 10x improvement on something no one cares about, so keep that in mind too. The point is to dominate not compete. 

Lean Startups and Domination

I’m beginning to see how lean startup tactics are indoctrinating us towards incremental improvements. Maybe you have a big idea and vision of how you will change the world. You dissolve that into a testable series of assumptions and set off to prove it. As you go along and test, speak with people, and iterate you increment. You hone in on the actual problem and optimize different parts of your funnel. However, it’s too easy to fall in love with the tests, data, and incremental improvements. Sometimes the best edit is a rewrite (I think PG said that). Sometimes your pivot is just an incremental improvement. We need to think less about optimization and more about domination. You improved your signup conversion rate by 5%? Cool, but you still only have 100 users because no one cares, you’re not can’t miss, not novel, not 10x, just noise.

Where do we go from here

Maybe it’s time we start thinking about intelligent design rather than evolution (not in the education/political sense). If we start thinking about domination from day 1, how does that change our approach to product and distribution? There’s the danger of solving the wrong problem, but there’s also the problem of not solving the problem hard enough. I already know how to optimize, but I don’t know how to dominate. I’m going to work on that.