Don’t Build Your Business on a Pinnacle
It used to be a sign of disrespect and condemnation to say that someone had their head in the clouds. They were foolish dreamers or cock-eyed optimists - certainly not the kind of down-to-earth folks firmly grounded in reality that anyone with any brains would want to bet on and/or invest in. Thoreau wrote about people building castles in the air (which he said was where they should be), but then he cautioned that the next steps needed to be putting solid foundations under them.
Right now, you can’t go anywhere without hearing or seeing another pitch for SaaS and enduring multiple arguments for putting your products and services in the cloud. I wrote about SaaS not too long ago myself although my view – then as now – was a pretty contrary one. (See: Why SaaS is More Dangerous than It Looks. http://www.inc.com/howard-tullman/why-saas-is-more-dangerous-than-it-looks.html ). As it happens, being in the cloud today is supposed to be way cool. Everyone will tell you that it's definitely the place for your business to be. But I’d say “maybe”. Because I think it depends entirely on what kind of business you’re planning to build and whether you’ve built the right foundation for moving forward.
This is because sometimes - especially in the world of technology - you learn that the more things seem to change, the more they stay the same and you eventually realize that they're no different than they've always been. I don’t want to rain on anyone’s parade, but the cloud’s no more a panacea and the answer to all things than any of the other wondrous tools and technologies that came before it. The cloud can kick-start you or kill you if you’re not careful. And sadly, if your head's stuck up there in the haze and you think the cloud's gonna solve everything for you and your business, you’re likely to be just as mistaken and wrong-headed today as you would have been years ago which was – by the way - long before we all discovered the supposedly silver linings inside all those newly-accessible and suddenly transparent clouds.
If your business plan and model are appropriate, the cloud could be a big help, but if your model makes no sense, nothing including the cloud will make much of a difference. Because when you really look closely, you discover that the cloud's not magic or another Oz – it’s just a virtual place in cyberspace - an environment to operate in - and for your startup to be successful anywhere - in the ether or down on Earth - you've still got to build a business that’s well-grounded and smart. There’s no question that the cloud’s cheap and easy in many ways, but there are plenty of things that you just shouldn’t ever do for your business and trying to do them cheaply is much worse than not doing them at all. So it pays to do your homework before you head into the ozone. And, in particular, that’s why, when you’re thinking about the cloud and your business model, it's so important to pay attention to exactly what you're trying to build.
Pinnacles are a Problem
Pinnacles are generally very tall and relatively thin. They’re a very precarious foundation for a business because they don’t provide a broad base of user engagement or commitment or support and they really limit your ability to connect to your customers and, more importantly, to react to and/or cushion the impact of adverse developments. The cloud encourages us to chase the world and boil the ocean from Day One because those opportunities are theoretically there for the taking. But, if you fall for the long thin line (essentially the polar opposite of the long tail), you find that you’re stretched way out (a mile high and an inch wide) and that a relatively modest upset, piece of bad news, or other disturbance can really knock your whole enterprise off course because your real connection to so many of your remote and very distant customers is so tenuous. To build a smart business, you never want to be spread too widely or have too thin a connection to your users and this is how I see a number of businesses today.
You want to be focused, but not single-threaded – you want to be straight, but not narrow – and you always want to have a couple of ways out of the tight spots. And it’s pretty easy to drink your own Kool-Aid if you’re not careful. For example, if you’re disrupting and revolutionizing an industry where the standards of response time and performance were historically measured in days or weeks, you don’t have to introduce your new solution and your initial metrics in terms of minutes or hours of turn-around time. Give yourself a break and some breathing room. It’s always easier to improve than to walk the customers back from some insane, unscalable and hyper-costly benchmark that you simply made up.
This is an area where too much information – being too data-driven – can actually limit your opportunities and your upside while increasing your vulnerability because you can fall in love with the measurements and lose sight of the critical relationships and your real business objectives. Take measuring turn-around or response times (as noted above) or tracking geographic penetration as examples.
Measurement is a relativist thing and when we are constantly measuring our results against purely pre-defined goals and objectives, it’s too easy to develop a case of tunnel vision. As the data tell us that we are drawing ever nearer to the goal (“our uptime is great and our response time is terrific”) and we convince ourselves that we’re getting better and better (“we have customers in 50 countries”), we lose sight of the fact that (a) these may be easy things to measure, but they aren’t necessarily the important things to focus on or optimize for the long run; (b) too much of a good thing probably isn’t a good thing if it’s too soon to manage it; and (c) there may be much larger and broader opportunities over the horizon and outside of our immediate zones of interest and – while we’re feeling so good about our near-term progress – someone else is out there getting ready to steal the main prize out from under us.
Because the cloud can so readily and inexpensively connect us to many or just a few users everywhere and because it enables degrees of unimaginable and constant connectivity, it is very seductive and it’s very easy to run down these rabbit holes and lose your way. You can quickly end up over-extended, under-manned and unable to meet the commitments you’ve made to your users and customers. It’s pretty lonely and uncomfortable sitting on top of that pinnacle wondering what went wrong. But at least it’s not crowded.
PP: “You Get What You Work for, Not What You Wish for”
