We use evidence to identify problems.
We use experiments to solve problems.
These two things require surprisingly different mindsets.
This is why when someone tells you something is broken, they’re usually right. But when someone tells you how to fix it, when there is no proven solution, they’re usually wrong.
This is why just describing an opportunity or, worse, raising awareness about a problem, doesn't actually achieve anything. Unless that convinces somebody to act. Potential must be fulfilled. Potential isn't an end in itself.
There is a lot of advice compressed into this simple quote:
You build a start-up to test an idea, and then you build a company to execute the idea
— Spencer Fry1
A start-up is a phase, not a destination.
Giving feedback is a delicate art. Whenever we share our perspective, we tread the fine line between helping shine a light on blind spots and highlighting uncomfortable weaknesses.
Receiving feedback is also a skill. Part of improving is learning to listen without immediately needing to respond - either to deflect or fight back.
This common pattern was pointed out to me recently, and now I see it everywhere.
Person A: “We need to do X”
Person B: “Umm, I can see some problems with X”
Person A: “Well, what are you going to do about it then?”
If we insist that every observation comes with a proposed solution, we’ll get given far fewer observations.
If responsibility for fixing things falls to the person who reported the issue, eventually nobody will report issues.
It's unlikely that the person who gives this kind of feedback is the best person to solve the problem they are describing anyway. Identifying problems and solving problems are different skills (remember evidence is the key to identifying problems, experiments are the key to solving problems etc).2
Ultimately we all need to solve the problems with our own work, by experimenting with possible solutions and seeing what results we get. Just acknowledging there are problems when they are pointed out is better than immediately trying to hand that work back to the person who is trying to help.
Or, another variant...
Person A: “I'm doing this new thing Y”
Person B: “Ooh, interesting. I've thought a lot about Y. Here are some of the challenges I see with that solution...”
Person A: “Why are you always so negative? I only ever hear you criticise. Can’t you say something constructive for once?”
If we take every piece of feedback as a chance to start an argument we’ll get less feedback.
Perhaps the person giving feedback intended to offend, but probably not. I’ve found it’s nearly always better to assume the best in these situations.
It’s very difficult to find the balance between being delicate with new ideas, so they have an opportunity to grow and develop, and being brutal with new ideas, so they are tested and challenged.
(See: Being Spartan with Ideas)
Often the reason feedback makes us defensive is related to timing. As I talked about previously, just being more explicit about the sort of feedback that is useful at each stage can make a big difference:
In the early stages, when all you have is a rough idea, feedback on the concept is valuable but feedback on the polish is premature. Ask for 30% feedback.
Later, when the idea has been developed but still has rough edges, feedback on the details is useful but feedback on the foundation is too late and so more likely to be annoying than productive. Ask for 70% feedback.
If we get this right we can create an environment where everybody is much more willing to share work-in-progress at a point in time where it can actually be improved.
Perhaps we need to reframe from “negative feedback” to “useful friction”:
I wish I was better at providing feedback in a way that didn't immediately cause the person I'm trying to help to get defensive or to demand a solution. And I wish I was better at receiving feedback without rushing to take unintended offence. Those are two things to work on ...
Young companies call the first capital they raise the “seed round”. That makes sense. The goal is to grow a big strong tree. That starts with a seed. But where do seeds come from? 🤔
This is one of those rare situations where money does grow on trees!
We talk about incubating and accelerating start-ups. But, in my opinion, much better metaphors are planting and harvesting start-ups.
Here's an example...
Trade Me was founded by Sam in 1999. I joined the team in 2000 shortly after he had convinced some former colleagues of his to invest $100,000 (in return for that investment they got half the company!) That money was used to hire the original team: firstly Jessi, then me and shortly after that Nigel.
(The Trade Me seed round was funded from consulting profits. Our pile of turtles stands on a foundation of “time and materials”.)
Trade Me was sold to Fairfax in 2006 for $750 million. By then the team had grown to 53 people. Some of us received life changing amounts from that sale - e.g. both Nigel and myself were shareholders in addition to employees by virtue of our own start-ups which were acquired by Trade Me at the time we joined the team. Others received smaller but still material amounts. Everybody in that original team was part of an employee bonus scheme set up at the time of the sale.
What happened next?
Let’s list some of the ventures that have been started by that small group of people who worked at Trade Me in those early days:3
Natasha started Webstock, which may have had a bigger second-order impact on the ecosystem than any of the other examples in this list. Natasha also started Lil Regie and Tim from the original Trade Me team also worked on this.
Toni also started and still runs Beauty Bliss.
Richard started Trade Tested.
Alan started ImpelHR.
Amnon was a partner of mine at Southgate Labs, which was the seed investor in Vend and also helped to start ThisData and Atomic. And let’s not forget Triage!
Erin started Boho Pet.
Sarah started Sparkle.
Marshall started Very Good Security.
Lance started Punakaiki Fund.
The list goes on...
It’s not just businesses. There are a number of non-profit and community organisations that have employed and been funded by the original Trade Me team. For example, after a decade running operations at Trade Me, Jessi went on to be the CEO at Predator Free New Zealand.
We could also include things that were started and funded by former Trade Me investors:
Phil and many of the other original Trade Me investors started Movac, which has gone on to fund a number of successful ventures, including Power By Proxi and Aroa Biosurgery.
Martin started Crema Capital.
This list would get stupidly long if we also included those things which were started by folks who joined the Trade Me team after the sale.
For example, just considering my own individual branch ...
After Trade Me I was an early employee and pre-IPO investor at Xero. Rod was on the Trade Me board at the time of the sale. Sam was on the Xero board and many of the original Trade Me team invested in the Xero IPO. Some of them were also subsequently employees at Xero, including Rebecca and Robyn.
After Xero, I was one of the original investors in Vend. I had first worked with Vaughan, who started Vend, when I was still at Trade Me and he was at Vianet (which originally powered the Travel Bug site we built). Again, several original Trade Me team members worked at Vend, including Sophie and Alex (who took over from Vaughan as CEO)
After that, I was the original investor in Timely. Ryan, Andrew and Will who started Timely all worked together at Trade Me (their first venture, BookIt, was acquired by Trade Me). Over the years Timely has employed a long list of folks who had previously worked at Trade Me. MOD, who was part of the original Trade Me exec team, was subsequently Chair of the Timely Board of Directors.
Repeating this exercise for others from the original Trade Me team would reveal a dense tree of subsequent ventures.
Last but not least, we shouldn’t overlook those who stuck around and continued to work on Trade Me itself, such as Jon who took over from Sam as CEO and was in that role for many years, and Allister who is still Head of Infrastructure. The sale wasn’t the end of the Trade Me story, and as it continued to grow it created huge opportunities for those who worked there to learn and take those lessons to many other places.
This is how you create an ecosystem. You plant a seed and let it grow!
PS This, by the way, is also why it's such a silly idea to discourage local founders from selling their ventures to overseas buyers. The $750 million that Fairfax paid for Trade Me in. 2006 has been multiplied many many times over in subsequent generations of ventures. Every new success is another pebble in the pond, creating a new set of ripples.
Top Three is a weekly collection of things I notice in 2021. I’m writing it for myself, and will include a lot of half-formed work-in-progress, but please feel free to follow along and share it if it’s interesting to you.
This is a special case of the pattern I wrote about previously when talking about innovation: often the people who invent things and the people who work out what those things are for and how to commercialise them are different people.
This list is based just on things I’m aware of and can recall of the top of my head and some lightweight LinkedIn stalking, so I'm sure it's incomplete. Apologies to anybody that I've missed. Please help me correct the record and I'll treat this as an open draft.