#164: The Most Important Question to Ask as a Founder
#164: The Most Important Question to Ask as a Founder
DC is often asked why he started Drift when he started Drift. As his fifth company, a lot went into the decision. But it boils down to a simple question – Why now? – with a simple answer– undeniable shifts.
In this episode, DC explains why “Why now?” is the most important question any entrepreneur can ask themself before starting a new venture. The answer must always be because of an undeniable shift – a massive change in our world, a megatrend that’s forcing people to adopt new behaviors. He also shares insights from three experts: Strategic messaging expert Andy Raskin, Sequoia Capital founder Don Valentine, and Sequoia partner and early Facebook employee Mike Vernal.
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Andy Raskin – Great Pitches Start with Change https://medium.com/the-mission/great-pitches-start-with-change-2c7e696b86ea
Don Valentine – Target Big Markets https://www.youtube.com/watch?v=nKN-abRJMEw
Speaker 1: Before we get to the show, did you know you can get more insights, just like the ones you're listening to. Right- hand seeking wisdom delivered right to your inbox. Sign up to get my weekly newsletter. It's called The One Thing at drift. com/ dc. You know who it is, it's the uncle. We're back with another episode of Seeking Wisdom. This episode, we're going to talk about something I get asked a lot about, it's called undeniable shifts. So I'm often asked why started Drift when I started Drift. So what was behind the timing and the reason to start yet another company? There's a lot that goes into that. But the thing that I tell people all the time is this idea of always, when you start a company, when you want to create a product, when you want to bring something new to market, the question that you have to ask yourself is one question. It's the most important question that as a founder, I've gotten wrong so many times, and the question is this, are you ready? Why now? That's it. Why now? It's the most important question that you ask, and that's the idea behind this undeniable shifts. So for me, when I think about starting company and why I started Drift when I did, it first started with this idea of why now? And then the next step was, okay, I'm going to start a company. I have to answer the why now question. And the easiest way I found to answer the why now question, the only way actually, that I've found to answer the why now question is this idea of an undeniable shift, a massive change in our world. Sometimes I call these mega trends. So mega trend. So it's an undeniable shift and we've all lived through one of the biggest or the biggest undeniable shift in our entire lives and that is the COVID- 19 pandemic crisis. So let me use that as an example. So the COVID- 19 pandemic has forced us or to adopt entirely new habits. It's an undeniable shift in our world. And because of that, you can start and think about how to resegment your existing product, create an entirely new category or company or entirely new product or service line by first starting with this undeniable shift, this pandemic that we've lived through and starting to think about, okay, what are the habits that we've all been forced to adopt this change, these changes? And there's the obvious one, many of us are learning, many of our kids and ourselves are now learning entirely remotely using Zoom, using other tools out there, right? And so that's an entirely new shift. As a business, we now can no longer rely on existing events, flying to customers, meeting people face to face, even having physical locations from an office standpoint. So think about all the shifts and all the behavior changes that have happened because of that. So when you start a business, you really have to answer this why now question. For us, we saw a paradigm shift. So when we started Drift, obviously there was no... It's actually six years ago now. I'm recording this in January 2021, so it's officially six years. And so we started the company in 2015. So what were the shifts that we saw then? We saw the shift going from, in B2B, which is where we focus, this idea that accompany could dictate the sales process and all the downstream effects and tools that happen because of that. Because there were scarce supply, they could dictate the selling process, so all the tools that many businesses rely on today were built in that paradigm. And so everything from a CRM to marketing automation systems, to the way that we set to, the way that we sell, companies still use today were built in that paradigm. But we saw a paradigm shift happening, and this is why we started the company, and this was the undeniable shift, was that all of a sudden, because there was more and more competitors and supply, I think about it as supply, in every given day category merging, in some categories it almost felt like it was infinite, because of that there's power shifting to the buyer, so it went from the company to the buyer. And when that happened, we thought to ourselves in starting the company, all the tools that our businesses use to sell and market to get new customers and retain existing customers would have to change. That was a massive undeniable shift that we were living through. And so that was a big paradigm shift, so that wasn't enough. We had to then figure out, okay, if we believe that shift is happening, are there set up mega trends that are forcing us to adopt entirely new behavior? And can we use that behavior change to enter resegmented and existing market? And one of the behavior changes, there were many that was caused by a mega trend that we saw was that everyone was moving towards whether it was in our personal lives or our business life to a messaging first life. So whether it was yourself, your kids, your grandmother, your friends at work, you were now defaulting to using messaging as your primary communication method versus in the past, picking up the phone, meeting in person, sending mail, physical mail, even sending emails, we were all shifting to this messaging first life. And because of that, we thought we could ride that behavior change to answer this undeniable shift that we believe was happening and it's still happening. So there are three people that I really rely on who have pushed my thinking when it comes to this idea of undeniable shifts, the first is the OG, our friend, Andy Raskin. So Andy Raskin, if you don't know him, follow him on Twitter, follow him on LinkedIn, follow him wherever you can follow him. He's an amazing person when it comes to understanding strategy and understanding this idea of undeniable shifts in storytelling. So Andy believes that great pitches start by doing one thing, naming a change in the world. And that's how we got to know Andy, because we named them this massive change in the world when we started Drift and he caught onto that. He had seen Salesforce do the same thing, Zuora do that as well, and then he saw Drift do that as well. And so there are five things that Andy Raskin says you need to do. The change must give rise to new stakes. So the change must create winners and losers. So an example is this, we initially set up people now sleep with their smartphones right here, boom, because they're always messaging. So if you're not messaging, you're losing. Two, Andy said, the change must be discreet. It's a zero to one shift, right? It's not an incremental shift. So incremental shifts are enough and you need to declare this change. And to some people it's going to feel like you're exaggerating. Like you're saying," Oh yeah, we don't use a phone anymore." that when we said we're moving to a messaging first world, but that was the reality. This idea of this finality opens up people's minds to this possibility that if the rules of the games have changed fundamentally but permanently. So change happens over time, but we believe this massive change has happened and that we've hit this tipping point in the market. Number three, Andy says, the change must be stated as a done deal, right? Not the result of an action, but that is done. It is final. It is happened. And it's undeniable. Four, the change must, to some degree, flout conventional wisdom. So people will think you're crazy when you're naming this change. They think you're dumb. They think there's hype. They think it's going away. They said that with messaging. They said that with bots, in our case. They said that with most of the things that we called out and this idea of building a brand and not measuring how we were getting leads or getting customers from these brain activities, all these things were criticized against conventional wisdom. Five, the change statement must describe how things have changed. Many teams will name something that's changing without saying, how? My customer expectations are changing. If you can boil it down for the audience, you need to really state this change statement, how things have changed, right? And craft and this kind of master statement that captures everything that you're trying to do under one umbrella, right? That's Andy Raskin. Again, follow Andy Raskin. He has a great podcast. I was fortunate to have been a guest on his podcast. The second person, I've talked about him in the past, his name is Don Valentine. He's now passed away, but he was the founder of Sequoia Capital. Sequoia Capital just so happens to be one of our investors, but I followed this advice long before they ever invested in Drift. So Don Valentine, right? He was one of the people who founded the Hammond Arthur Rock, and a few others really founded the idea of venture capital, right? This is great talk and I hope we link it up in the notes below. And when you're in the notes, don't forget to leave a 6 Star review. Like this, thumbs up, whatever you do, 6 Star only podcast. The only one in the universe, the first and only and last 6 Star Podcast. So Don, we'll link it up below. Visit Talk The Don Game at Stanford, The GSB school. And in that talk, he it's about this history of venture capital, how they started Sequoia, but he always broke it down to one thing, that he would ask all founders, and guess what it is. You already know the answer. And the answer is why now? Why now? When he was looking at Apple, when he was looking at Google, when he was looking at all these iconic companies that Sequoia has invested in that he participated in, he would always ask himself one question, why now? And why now always was represented by a massive undeniable shift that no matter how poorly the team executed that, that shift we're so big that it had so much momentum behind it, that there were going to be winners despite the execution risk. And there's massive execution risks when it comes to investing, especially in startup companies. Right? He said," We don't choose partners. We choose markets." His thing was always why now and choosing a market. And once they've chosen a market, there's going to be a primary product in that market and they rarely would invest in only one product. So his thing was, why now? What's the undeniable shift? What is the market that it's creating or resegmenting? And in that market, we will probably not only invest in your company, we're going to invest in multiple companies in there because we're going to de- risk this as an investor and have multiple bets in this massive new market and there will be lots of winners in there. All right. The third person, the last person that I look towards is someone who you can follow now. He just so happens to also be part of Sequoia Capital, a newer partner, and his name is Mike Vernal. And Mike Vernal was an early, early, early person at Facebook. His question and his version of this is, why is this company being started? It's a variant undone Valentine's question, but it's why is this company being started today? Why wasn't this company started three years ago? Why shouldn't this company be started three years from today, right? It's really trying to take that why now question and distill it even further and be able to try to not predict and not tighten the market, but just try to tighten the horizon of when this kind of company should start or should it even be started at this point. he says, if something seems like a good idea, and it seems like the world should work this way, but it was two, three years ago, then there's only two explanations. No one has ever thought about it, highly unlikely. And two, which is the likely, far more likely probably almost a hundred percent of the time is, someone else has tried it and it didn't work for some reason. So dig deep and figure out why didn't it work. If there isn't a clear macro trend, Mike says, that explains why companies should be starting today as opposed to three years ago, he encourages entrepreneurs to study history, which is something I talk about all the time, study history, and try to understand what people have tried in the past and why it didn't work. All right? Boom. Thank you for joining me for another episode of Seeking Wisdom. Don't forget to go watch that video by Don Valentine, the OG. Follow Mike Vernal. He's brilliant. I wish I was 1% as smart as him. And follow my friend, Andy Raskin, fellow brand and strategy and storytelling nerd. You guys will geek out on his podcast and everything that he's doing, undeniable shifts. But before I go, you know what I'm going to say? Hit the uncle up, 6 Star only podcast. Don't forget to leave a comment, a like, tell me where you're reading right now. Leave anything. I've read every single comment. And don't forget to check out me on text, Instagram, Twitter, everywhere, all over the internet. See ya. Let me know what you thought of this episode by texting me up, 1- 212- 3801036. Again, 1- 212- 3801036. Now, if you're looking for more leadership insights, sign up for my weekly newsletter, The One Thing at drift. com/ dc. Every week I'll share a habit, tool or mental model that's helping me reach my goals. I hope to see you there. Text me, hit me up.