It’s better to change your vision than to lose your money
Would you rather be “right” or be successful?
Changing your mind about an investment - intellectual, emotional, or financial - is difficult.
Munjal Shah, founder and CEO of photo search company Riya, has been writing a series of posts narrating his experience over the past few months getting his startup off the ground. Highly recommended reading for entrepreneurs and others with an interest in startups, online web services and software applications.
In startups and other forms of investing, it’s common to have a vision or thesis guiding your decisions. Technology companies, and especially technology startups, tend to be big on vision, which can be helpful in achieving internal alignment and for building external awareness among potential customers and partners. It can give everyone a common sense of purpose or mission, and can sometimes take on a religious or political tone (i.e. Apple fanatics, the first Internet Boom, George Gilder’s Telecosm, or lately “Web 2.0″).
An important skill is recognizing when the facts on the ground are diverging from the vision and it’s time to reconsider. Some relevant investing adages:
- It’s cheaper to lose your opinion than to lose your money
- It can be very expensive to convince the market that you’re right
- The market can stay irrational longer than you can stay solvent
In today’s installment of his startup journal, Munjal recounts their discovery that their users weren’t behaving the way they had expected. Riya was conceived as a platform for users to upload their own images for tagging and search, but more and more people come to the site to search for images without uploading anything. The Riya team has been puzzling over what’s going on with their beta users for weeks when they see:
The answer to the question we had been seeking. It didn’t come from our brains but from the silent majority of people who were using our site each and every day. For most people Riya was not a replacement to their Flickr accounts. Riya was not a replacement to Y! Photos. Riya was becoming a replacement for… you guessed it: public web image search!!
Munjal’s comment on entrepreneurs’ drive to change the world with the power of their vision, and the corresponding difficulty in assessing incongruent facts, is right on:
Entrepreneurs are an odd bunch. As an entrepreneur you create a vision of what can be and then work really hard to make that happen. It is your imprint on the world. It is your legacy. Maybe 2000 years ago if you wanted to leave a mark you would be Julius Cesear or Genghis Khan. Today you start a technology or Internet company. I believe almost all entrepreneurs seek immortality through their products. This is one of the reasons we all seek to build products that are used by and benefit the lives of as many people as possible. We want to do good, but we also want to be remembered. Some admit this and some don’t, but it is true. The greatest crusades in the world are always for the intangible. There is no other explanation for why founder’s of companies work so hard and sacrifice so much. Money can only account for so much of this. You have to believe that you are on this planet to somehow change it.
However, this is the achilles heel of the entrepreneur when changing strategies.
The desire to imprint can leave you deaf to the input from your customers. Like Alexander your men can want to go home and you want to press further into India. So you ignore the facts and continue trying to imprint your first vision on the world. When the data doesn’t support you, you say words like:
“We were ahead of our time.” - Full Denial
“I just have to hold out longer and people will see the value.” - Almost full denial
“If we only had this feature people will use it” - Medium denial
As a startup, Riya is in the midst of defining (and redefining) itself, and is taking rapid steps to revise their vision, rather than ignoring the mismatch between their original vision and the behavior of their growing user base.
Some would argue that they should stick with their original vision, the one that’s gotten them this far. But when a startup business is faced with flat to slow growth in it’s initial proposition versus strong demand growth in an unheralded aspect of their offering, it’s a good time to consider whether a new vision is order.
Long ago, I once had a company that spent a lot of time and effort building an advanced signal processing system, only to discover that most people wanted to do very simple things with it. It took us a while to realize that our “vision” helped customers find us, but most of them actually wanted something different than what we had in mind. (It didn’t help that were really proud of our product.) We eventually came out with a product that actually did what customers were asking for, which was predictably, far more successful than the original.
One of the things I’ve learned (and am still learning) over time is the value of recognizing and reevaluating a broken thesis (or vision), the sooner the better. One of the biggest inhibitors to changing one’s mind is the fear of looking silly, that other people will think badly of your decision. This can be an expensive fear, when it causes you to stubbornly follow an investment thesis or startup vision which is showing clear signs of being flawed.
It looks like Munjal and the Riya team have elected to change the vision rather than trying to convince the market that they were “right”. I’m looking forward to seeing how the new vision shapes up.
Tags: startups, entrepreneurship, investing, management, vc, riya, ojos, image, search, business
