There’s a scene in comedian John Candy’s North of the Border satire Canadian Bacon where a hawkish American president, eager to boost his ailing economy with wartime growth, incites our neighbours to the South to take over the C.N. tower. As an armed SWAT team storms past bystanders at the base of the building, all the Canadians murmur complacently: “Sorry.”
The apologetic Canadian is a universal stereotype. Even the “eh?” with which we apparently end all sentences is a form of upspeak, signalling our uncertainty and trepidation: We’re not quite sure.
These days, we have little for which to apologize. Our tech infrastructure is booming; costs are good; big rounds for upstarts like Lightspeed, Breather, and Varagesale mean deeper powder than an inland BC mountain; and world-class exits like Shopify shine a good light at the end of the startup tunnel.
The problem is, we’re not evil enough.
Once upon a time in an incubator
Back in 2010, Raymond Luk, Ben Yoskovitz, Ian Rae and I were running a startup incubator called Year One Labs. We wondered whether the typical accelerator formula—you have ninety days, pitch hard, hope you guessed right, don’t mention your competitors—had a problem.
We also thought a series of blogs by entrepreneurial startup mensch Eric Ries—which eventually became The Lean Startup—held the answer. Eric suggested a greater focus on customer development before swinging for the fences. He emphasized sustainable growth from customer activities.
Ultimately, Lean Startup was a kind of Zen for founders: First, know that you don’t know.
We decided to build our incubator along these principles. We had a greater focus on customer development; gave participants up to a year of runway; set a series of specific milestones; ran hackathons instead of interviews; and insisted on metric-driven learning. We also didn’t expect the teams to have their own product ideas at the outset; In fact, Localmind, which was acquired by AirBnB, was originally Ben and Ray’s brainchild, made real by an extraordinary triad of founders.
When we met with our founders each week to see how they were doing, however, we had a problem. Many of them would tell us their metrics, and we had no idea whether they were doing well or not. There simply wasn’t enough data about what constituted an “acceptable” level of churn, conversion, or customer lifetime. We didn’t know where the lines in the sand were.
Ben and I decided to find out, in what eventually became the book Lean Analytics. Today, entrepreneurs are fairly open about their key metrics, and there’s a good body of knowledge about which KPIs to watch and where they need to be (for example, Valley demigod Paul Graham says if you’re not growing revenues 5-7% a week, you’re doing something wrong.) But back then, there wasn’t much shared insight about data and baselines.
We started by asking people for their metrics. At first, they were tight-lipped. But beers, braggadocio, and persistence won out, and we gradually learned what to measure from dozens of founders, investors, and analysts.
That’s not the point of this post. The point is that along the way, we learned something else: That everyone has a skeleton in their closet.
Are you being evil enough?
Most of the successful startups with whom we spoke had done something subversive to get where they were. At one point, this became so common we actually considered putting Lean Analytics on hold to write another book about subversiveness. Because fairly consistently, across over a hundred companies, having a trick up your marketing sleeve was the difference between success and obscurity.
We’d ask our founder teams, “are you being evil enough?”
We struggled with that word, ‘evil.’ We didn’t like the idea of being genuinely nasty, or even criminal. We wanted to succeed on merits. But at the same time, we needed to wake the teams up to the fact that finding a better way to get the market’s attention was absolutely essential to success.
Some of what we talked about is today called Growth Hacking. I don’t like that term either. More often than not, it’s used by mercenary marketers hoping for a pay raise and hipster glasses, who do slightly slimy things their employers don’t want to do themselves, such as automating Twitter responses, harvesting e-mails, and so on.
Successful companies exploit vulnerabilities
But the winning companies we spoke with were on to something else. They found a way to exploit the system they were in, and to make it do something it wasn’t supposed to.
- Farmville figured out that apps could post to timelines, and suddenly everyone was asking their friends for grain.
- Dropbox implemented a two-sided reward model and everyone was sharing invites in the hopes of claiming free storage.
- Github created artificial scarcity, driving up demand long before people knew what it was for.
- Hotmail included the ubiquitous “Get your free private email” message in every mail someone sent from their system.
- Getsatisfaction crawled the web, looking for complaints about a brand; copied them all in one place, teaching search engines they were the top destination for dissatisfied customers; and then charged the brand for access to those customers.
- Tinder founder Whitney Wolfe visited sorotities, convincing university women to install the app—then walked across campus to fraternities, and had the men judge the women. The user base tripled.
- Netflix recognized that home broadband wasn’t ready for streaming video, so it turned the US Postal Services into a very high latency, very high bandwidth broadband connection.
It’s a long list, and many of these “hacks” are commonplace today. But the point is that, once upon time, they were new and breathtakingly inspired. They were the marketing equivalent of zero-day exploits. And they made the startups successful.
Even big companies can be subversive:
- In a perhaps apocryphal tale, computer maker Amdahl used to leave behind a cup with their logo on it, calling it the “million dollar mug.” When the prospect asked why, they replied, “because when IBM sees it, they’ll know we’ve been here and drop their price by a million dollars.” It’s a perfect opener, calling IBM’s value into question and making the IBM sales rep look like a jerk if they don’t slash prices.
- Dunkin Donuts outfitted Korean busses with devices that spray coffee aroma every time the Dunkin Donuts jingle played; coffee sales near bus stops went up 29%.
- New York cabs (who probably should have been worrying about Uber) instead implemented three “suggested tip” levels of 20, 25, or 30% on their payment screens. Average tips rose from 10% to 22% as a result of this price anchoring.
Evil? Maybe. Essential for success? Definitely.
In David and Goliath, pop-culture anecdotist and big-hair end-boss Malcolm Gladwell cites a study by Ivan Arreguín-Toft that looked at all mismatched major wars—those in which the two sides’ strength was extremely uneven—in the last two centuries.
He concluded that when the war is fought by conventional means, the big guy wins; but when the underdog employs new tactics, the scales tip in favor of the little guy.
Stop apologizing
There’s something almost un-Canadian about this kind of thinking. We aspire to be country of peacekeepers and politeness, of taking the high road, of the better way, of transparency. But that’s perilous. Canadian thinking also gave us Blackberry’s CEO wondering why on earth anyone would want a camera on their phone. This mindset is our biggest liability as a country of entrepreneurs.
Unfortunately, in today’s startup world, it’s less about whether you can build something and more about whether anyone will care. Figuring out how to make people care—often in subversive, slightly evil ways—is absolutely critical.
I don’t actually want anyone to be evil. We shouldn’t have to stoop to their level, to ride the slippery slope of spam towards the zero-sum-game that analytical megamind Andrew Chen calls the Law of Shitty Clickthroughs. But if we want to compete on a global scale, we have to stop apologizing, and to spend our time finding subversive ways to bend the markets we’re in to our will and whim.
We have to stop writing press releases, and start hacking markets.
We have to be a little bit evil.
(I’m sorry.)