Being Judged on the Present

There are two ways somebody can interpret this video.

-“I’m much better than that kid at golf! [says a 33 year old]. I have a 12 handicap and can outdrive that joker by 200 yards!”

-“Wow, that’s remarkable for somebody of that age…if he continues like that, he could someday win 14 Majors.”

Both assessments are logically correct. But as a young company selling into enterprises, you will often get the first reaction.

In my experience, a lot of larger corporations (and people who work at them) can generally only see the present — the present capabilities, the present revenue (or trajectory), the present limitations. In startups, you need to see the future. Not as a fortuneteller would (impossible) but to judge teams and ideas on their future potential / adjacencies.

There is a natural lesson here for an entrepreneur — which is to beware showing “leanness” of product when interacting with a large company. Saying “we can/will add that later” unfortunately lacks credibility, because large companies are often incapable of building anything quickly, and hence their employees tend to doubt this statement. “Blockers” in the large organization will try to scrap any deal with a “deficient” startup.

The right way to build a typical startup is “lean.” Overbuilding before product-market fit can be catastrophic; building sophisticated management and operational processes before you need them is normally a vast misallocation of resources and actually prevents learning of what the market wants.

But present your lean startup to a large company and you’ll hear “where’s the beef?” When selling a product to a large company, or even selling your OWN company to a large company, you’ll be thoroughly evaluated on the present — which sometimes is good in, say, M&A when you are on an unsustainably high growth rate. The hard part of a company is generally making the whole thing work; it’s not the sophistication of a set of algorithms, but having the whole product perform at scale with an organization that can support it.

I saw this firsthand at TrialPay, which was, at its simplest level, an advertising technology company. An early potential deal with a large company did not materialize because said company was displeased with our optimization systems, even though we could add a better optimization algorithm in a few days (GitHub shows 329 collaborative filtering projects). But we were judged on the present, and if we had the opportunity to do it over, I would have actually invested those few days to look “fatter” — even if it had no impact on our business.