Experience Matters... Especially In a Startup

There is a belief in startup-land that you have to be younger than ___ to successfully innovate. To some extent, that is driven by the youth of the founders of a few highly successful companies like Facebook and Twitter, magnified by the adoring media coverage they get.

And yet, even when I was back in my 20s and 30s, there was a nagging presence in my head that said, "there is so much I just don't know."

The Big Red Car posted, just today, how failure is one - very expensive - school of experience; sometimes, if you can, it is better to rent that experience. The overwhelming majority of entrepreneurial ventures fail within their first two years; for venture-backed startups, those that reach for the golden ring and either get it or fall off the carousel, the failure rates are even higher.

There are a lot of ways to mitigate the chances that your company will be one of those failures (Eric Ries' Lean Startup and the broader Startup Owner's Manual by Steve Blank are a great way to start), but experience - hard-won, real-world experience - is one of the most important.

Unfortunately, when your business hits a roadblock, or looks like it is about to smash into that brick wall, you don't have time to gain the experience then, and you would much prefer not to have this brick wall be the experience for next time. It is much nicer to have the experience for this time.

Experience buys you three key things:

1. The ability to respond more quickly to unexpected events;
2. The ability to foresee many of those potential events;
3. The ability to view the world more broadly and thus find the best path.

Here are a two examples.

Security vs. Performance

A few years ago, a friend of mine from business school became COO of a startup that managed consumers' data online (nowadays, we would call it, "in the cloud"). They were suffering from 2 key challenges:

• Performance: Their end-user client had some performance issues that made it appear slow to the end-user. This is a visible problem.
• Security: Their data storage design and communications protocols had some significant security weaknesses that had not yet leaked private data. This is an invisible problem.

Most young and inexperienced executives or founders would see a customer-facing problem, one that restricted growth ability, and focus resources on performance.

The COO asked me look at his challenge. Bringing to the table experience with lots of consumer technology products, media coverage and implementation, I showed him two scenarios. Imagine Walt Mossberg at the WSJ or David Pogue at the NYT (they were both there back then) reviewing the product. They even have an independent security analyst review the design.

• Verdict A: "A little slow, so it needs some performance improvements, but you can trust it with your data. If you need it now, go ahead; if not, check again after the next major release in six months."
• Verdict B: "Performance is great, even better than competitors. But the security weaknesses are glaring. We simply cannot trust this product or company with our data. Steer clear."

Where would you rather be? A bit slow, "check in 6 months?" Or "we don't trust them... steer clear?"

As long as performance slowed growth but did not kill it, the company could survive. For a consumer-oriented technology service at early stages, betrayal of trust would be the kiss of death. Trustworthy but needs improvement is a lease on life.

Experience was crucial to see these scenarios before they happened.

Data vs. Privacy

Tim Barker is Chief Product Officer at a Big Data analytics company, DataSift. You may have heard their name in the news; they announced last week that they had signed a very important deal with Facebook. DataSift would use their analytics to analyze and aggregate the massive amount of data in Facebook's pages, news feeds, updates, just about everywhere (hopefully excluding WhatsApp, which is or was in the process of putting in WhisperSystems' end-to-end encryption), and then providing actionable insights on that data to corporate and other organizational users.

It is one thing for United's social media team to watch a Twitter feed or Facebook update for someone mentioning them with an @united or #united; it is another to understand the trends that involve them even when they are not part of the conversation.

This kind of insight can be invaluable to customers, and therefore worth a mint to Facebook and to DataSift. The sheer amount of value available to those paying customers is obviously the reason they are doing it.

How they do it is a mark of experience.

Over the weekend, Tim posted an article on LinkedIn called "7 Principles for Big Data and Consumer Privacy." I highly recommend reading it. For those who don't have the time, here are the two key takeaways:

1. Not Enough Experience In Some Places: At the Strata Big Data conference, only ~1% of the sessions were dedicated to ethics and data privacy. The people digging into big data don't know how much privacy matters or don't care. Either way, it is a sign of not enough experience.
2. Great Experience In Others: Tim leverages his experience to argue that privacy must come first. Tim understands that even if you legally can violate the privacy, if you do, you will erode trust, get short-term gains for long-term loss, and eventually lose everything. Don't do it.

Unfortunately, the conference was a great example of insufficient experience... and the LinkedIn article is an example of the value of experience.

Will there be those who shun his company because he is not aggressively pursuing, as he termed it, "the art of the possible" at any price? Sure. In the long-run (and in Internet time, the long-run is pretty short), will he be happier he did, and have much longer term stability and trust? Absolutely. If the choice is between Stratton Oakmont and customer first, leave Stratton behind.

Experience matters.

Summary

Get yourself as much experience as you can in every field that matters to your business: finance, technology, operations, security, marketing, sales. At the same time, make sure it is open-minded experience. Too much narrow experience can stultify the mind. Instead of the person seeing old problems and coming up with new ways to deal with them, she or he ends up stuck in the same old way of dealing as before.

I have gained many of those experiences - scars on the back - from hitting roadblocks and walls, and helping others through them; fortunately, I leverage those experiences for my clients.

Get your experience; buy your experience; rent your experience. Don't wait until you are flat against the wall.