Considering where to learn about startup success

Since I've started joining startup communities, I've be deluged with opportunities to hear how founders "made it," as well as offers of mentorship from people with a lot less experience than myself. Granted, I'm not a successful entrepreneur, but I have a deep and flourishing understanding of how businesses succeed. And it's not by imitating someone else's success. 

Farnam Street: Survivorship Bias: The Tale of Forgotten Failures, 2019-Dec by Shane Parrish

Considering survivorship bias when presented with examples of success is difficult. It is not instinctive to pause, reflect, and think through what the base rate odds of success are and whether you’re looking at an outlier or the expected outcome. And yet if you don’t know the real odds, if you don’t know if what you’re looking at is an example of survivorship bias, then you’ve got a blind spot.

Whenever you read about a success story in the media, think of all the people who tried to do what that person did and failed. Of course, understanding survivorship bias isn’t an excuse for not taking action, but rather an essential tool to help you cut through the noise and understand the world. If you’re going to do something, do it fully informed.

Perspective on marketing: no easy answers

I enjoyed reading this article in Entrepreneur, and I decided to dig a little deeper into the concepts discussed. In particular, the article referred to ROAS, or Return On Advertising Spend. A Google search provides the following automatic answer:

The formula is quite simple. You simply divide the revenue that is produced by advertising by the dollar amount that is spent on that particular advertising to arrive at your ROAS.

Unfortunately, as the author of the article noted, the marketing challenge is never that simple. ROAS is frequently used to select advertising channels. In the real world, ad channels don't perform independently, and the length of the sales cycle has to be adjusted from both the product and the target audience. No easy answers. 

Entrepreneur: Marketing Is Still an Art (and a Science), 2019-Dec-28 by George Deeb

And lastly, we were managing our agency to optimize the wrong data metric. We were pushing them to drive an immediate ROAS. The problem with that was the only transactions that happened immediately, were the small ticket online ecommerce orders worth $500 each. Not the big $5,000 offline orders we wanted to be closing, which had a longer 2-3 month sales cycle. We immediately shifted gears and told our agency not to worry about immediate ROAS (we would track that in 3-4 months). Instead, the only data point we care about is driving big-ticket leads into our sales pipeline (that we know won’t close for 2-3 months). In this case, patience for proving ROAS would be a virtue. 

Principles for Humane Technology

Tristan Harris has some recommendations for us. See his video from Nov. 14: https://humanetech.com/principles-for-humane-technology/