Startups: Stop innovating so damn much
Startups should innovate, but not too much
We didn’t invent the chatbot. The chat interface we sell looks like, well, a chatbot. We more or less promise the same things (deflecting support tickets, freeing up support to focus on valuable stuff).
Frankly, most things are just like any other chatbot. Except for a few things, which are our differentiators. Those are wildly different. They’re you-can’t-get-this-anywhere-else levels of different. Like co-browsing (where Copilot actually shows the user what to do inside the interface) and workflows/APIs (doing things directly for the user).
And that’s precisely the point. I think most founders should stop innovating on everything - and start innovating more on fewer things. Here’s why:
Startups, stop inventing
Founders are good at innovation because they question assumptions and create with solutions the status-quo-blinded incumbents couldn’t imagine. Founders are this kid:
This trait (combined with a moderate-to-severe allergy to authority) is why they quit cushy big tech jobs to launch a startup: It’s an opportunity to build a company their way, with nobody telling them what to do.
This is a good thing in doses - the best startups do reinvent categories by questioning the basic assumptions. But like many good traits, it can get too much.
That’s when you get the startups that do everything differently. They eschew the Bay for Tuscaloosa, ban meetings, run development cycles on moon phases and equip each employee with a company-sponsored pet lizard. They “DoN’t LiKe MaRkEtInG”, so they don’t do it. They believe customers are wrong when they say they want certain features that every single competitor has.
This might make people look like visionary founders. But operating like this can destroy your company for 3 reasons:
1. It slows you down
Innovating on every single thing takes longer. You’re building proprietary systems where others can copy-paste. It also slows you down later on. If you need help from an investor, fellow founder or consultant, they won’t be able to pattern-match.
2. It creates risk in your company
Doing something non-consensus is basically saying: “All these billion-dollar companies’ assumptions are wrong. They succeeded in spite of them, not because of them. I will do this differently because it inhibited their success.”
This is risky for a few reasons:
The burden of proof is on you: Their business is already successful, yours isn’t. This should make your reasoning skew towards the consensus choice.
If these things are actually inhibitors to success, the more of them you reject, the more unlikely it is that the incumbents would succeed (which they did).
You can question everything during the big platform shifts (analog to digital, on-prem to cloud-hosted SaaS, buying albums to streaming…). But that’s not what most startups are doing.
3. It makes hiring harder
Being totally different makes your company less legible to potential talent. At worst, an oddball startup repels good people who don’t want to work on a weird product with a weird culture and a weird way of operating.
Even if that doesn’t happen, you don’t want people to spend their first 6 months in your company learning to navigate your company. You want them to get things done quickly, which is easiest if that’s more or less the same to what they’re used to.
Convinced it’s not worth innovating on everything? Here’s a non-exhaustive list of things (usually) not worth innovating on:
Job descriptions
Benefits
Company wiki
Company rituals (like standups)
Slack channel setup
Comp philosophy
Location policy
Almost all software you buy
That doesn’t mean you should never innovate on these. If your target market clusters around Little Rock, Arkansas, by all means head there. Maybe your unique comp philosophy does attract better talent. But usually, I’d innovate elsewhere.
Sometimes, it’s hard to know the consensus choice. Here’s how I do it: Assemble a group of further-along companies you can ruthlessly copy. It’s even better if you know the founders so you can get (a) permission and (b) text them when you’re facing a decision and then copy what they do.
What’s worth innovating on
Now that I’ve poo-poo’d innovation for a few hundred words, let’s get to where you should innovate. Without product innovation, a startup is just a copycat with less money, fewer people and no brand. And if working at your startup feels like a bureaucratic corporation, why wouldn’t they work there?
Clearly, you need to innovate - selectively. And those areas you do select for innovation? Lean into them with all your weight and be all-in on them.
I think about these areas as bets. You’re betting that a) you know something better than the billion-dollar incumbents and b) the effect of those bets is so large you can win against them.
That means a good innovation bet has two characteristics:
High upside
If you’re going to expend the effort of innovating, it better be worth it. There are some categories where innovation has high upside. A product decision can have giant upside: making a category accessible to a new market segment can be worth billions.
Things that typically have too low of an upside: Slack channel organization, wiki, etc. Few industries have such horrible knowledge organization problems that it’d be worth innovating on.
High conviction
You should be able to make a good point on why this is holding back your category and worth innovating on. Maybe you have data, maybe you spoke with a bunch of customers.
Here’s how this worked for us:
We realized that irrelevant popups ruined the user experience. If we could make modals more relevant, then the user experience would improve, product teams would see more engagement, retention, activation etc. (this is the conviction part). To increase that relevance, we could build better targeting. This is what lets our product perform better than incumbents’ and helped us win deals (this is the upside part).
A few things generally worth innovating on:
Product features
Growth channels
GTM strategy
Culture
Values
When you think about successful startups, you can think of differentiated product and growth strategies. But how many startups won because of their unique meeting philosophy? Which industry was disrupted because a startup used Discord, not Slack?
By copy-pasting almost everything, you become more innovative where it matters. You won’t waste time on obscure, inconsequential decisions.
This is the paradox of innovation: By innovating in fewer domains, your company becomes more innovative.