Jeff Hoffman: How to overcome criticism of your idea?

Kinda missed his talk during the SVC2M event due to an 1-to-1 session, now I know why it's the most liked talk: Inspiration and No holding back (and no excuses).


Notes:

• Successful people are not smarter. They just wake up and go do something about it, no more excuses.
• Entrepreneur take gamble on themselves.
• Info Spunge: read (and gather data points) about things which might not be relevant to what we are doing, and somehow the dots might connect after a few cycles to form a new picture.
• You'll fail, so what?
• Leader: build a team who is smarter than you.
• Ask what your future team member want? Do you share the same value or vision?
• 299 vs 300: It's what differentiate Heavyweight Champion and other boxers.
• Should I do something which make instant money, or work on the product? Hardwork & Sacrifice are the nutients
• We always know we are going to sell everything, but let's focus on selling one thing. Amazon got so good at selling books, people start asking what else are they selling. Same goes of Zappos.
• Protect Idea: Patern, Switching Cost, Industry with Relationship
• Blue Sky: Pretend there is no gracity and rules, don't try to innovate by making more lanes in the highway to solve traffic.
• You cannot control of being a victim, but you can control if you want to continue to be a victim.

How to take on Negativity?

• Don't take advice from golfer if you want to play baseball (find the right mentor/advice)
• Great Multi-tasker = No Focus
• The Drive to get it done now = Impatient
• Not afraid to try something no one else had tried before = No Respect for Authority
• Quit taking opinion from the guy you are not going to sell your product to

PS: I always knew I am pitching/talking to the wrong kind of people: they are not the users of my product, they do not understand the dynamics of consumer Internet and they are definitely not entrepreneurs. Thanks Jeff for the validations.


It's time to do more with less excuses.

Why users' desires and needs are the most underserved?

We know Malaysians are crazy about food (the further we traveled, the better the food taste), and there are plenty of restaurants popping up and closing down every month, yet there are very little successful websites which help consumers to look for good food and restaurants. There are probably 2 dozens of food websites (non-blog) in Malaysia versus a few hundreds food bloggers, and Malaysians actually get makan advice from food bloggers rather than using a food website like Yelp (for Malaysia).

We know fairly sure most Malaysian eat out and there are plenty of thriving restaurants, but why the supporting web services to help match foodies with their desired restaurants is not quite there yet? In fact, most food websites are started as a hobby project; and some done by small companies, and the big players are certainly not in sight.

Is Malaysian web sphere not vibrant enough? I don’t think so. We have Groupon and dozens of its clone such as MyDEAL and Dealmates. For online property, we have iProperty, ThinkProperty and PropertyGuru. For job hunting, we have JobStreet, JobsDB and Monster. For e-commerce, we have Lelong/SuperBuy, Postme, AirAsia Megastore and Jipaban (in fact, most individual setup a blogshop).

Why are certain segments more vibrant and filled with bigger players? I have a theory: short cycle to profitability. Most of these segments require low development time and cost, perhaps high marketing spending, and the ability to monetize and be profitable within 6 months (or gone out of business). Almost everyone can setup a Groupon shop, though you need to have sizeable capital for marketing and hiring sales people, and there are multiple proven local models and success stories where the top 10 local Groupon clones are hitting the revenue of RM 200,000 to RM 5 million per MONTH! It’s like a gold mine, and everyone is getting the shovels. Success story like iProperty and JobStreet shows there are millions of ringgit to be made from the local market, thus people are willing to invest in and try to wrestle some market share from the big established players. How about e-commerce? We never really heard about most of the websites besides Lelong. My theory is E-Commerce = Sales = Money, thus people inherently thinks there are always money in this segment (just like a brick and mortar shop which sell things). E-bay could be an inspiration for some.

So, does that mean there is no money in helping people to discover great food, but tons of money in selling restaurant coupon? Let’s just say selling restaurant coupon is easier and faster. There are basically 2 type of consumer Internet business: Type A) one that focus on the users and help them to get what they need. Type B) focus on the merchants and make it super easy for users to buy the merchant service. TripAdvisor and Yelp is Type A (focus on users); while services like KAYAK, Expedia, Booking.com, and Agoda is Type B (focus on merchant). Bigger companies would like to venture into Type B kind of business, because it’s nearer to the money (there is profit in every booking).

What is Type A (user-focused)’s business model, like TripAdvisor? TripAdvisor is more costly to develop (platform, content, community), which might take 1-3 years to gain traction with minimum profitability; once they became the market leader and everyone goes to TripAdvisor’s website to plan for travel and seek recommendations, then it became a valuable platform. All Type B business like Expedia would want to be featured on TripAdvisor website, because there is where their customers are. TripAdvisor make its profit from referrals bookings made on Type B’s platform, without the need to handle customer service and all the work. Click and KaChing!

What is the different between TripAdvisor and Yelp's business model? TripAdvisor is slightly luckier as they could make profit from travel booking business like Expedia, and they don’t have to do the hard work of engaging every hotel and travel agencies in the world. Is there a booking service for restaurants? Perhaps there are some, but nothing as elaborate and vibrant as Expedia. My guess is Yelp! still have to do a lot of ground work, engaging restaurant owners and merchant to do some kind of advertisement or promotions on the website. Each travel deal could average RM 500, but each restaurant deal is only RM 50. For restaurants, there are more work and less money.

So, why would we want to do Type A (user-focus) business if most of the money is in Type B (merchant-focus)? I guess I am a believer that if I do something which actually helps others to solve their problems, it means I am creating value and good things will happen. A lot of people are trying to look for great places to makan (including me) every day, and I am serving that need. Though that might not sound very business-minded, but I do believe in its value (though I got criticized a lot by business-minded person who thinks I am delusional for treating this as a business). Basically I believe we solve a problem, serve a need and acquire users who like our services.

Mr. Stoppelman (Yelp) said that the site deliberately tilts its rules to support the reviewers. “We put the community first, the consumer second and businesses third,” he said. - Source: NYTimes

Besides personal and philosophical reasons, there is a long term strategic reasons as well. It might take you 3 months to start a Groupon site and start making money, and it’ll take any guy 3 months to be your competitors and reduce your profitability. The barrier of entry is very low, and it’s a very hot gold mine; and money can buy success easily through marketing in this case. How many people are willing to invest hundreds of thousands and be patient for 1-3 years to gain traction; and have the opportunity to monetize in the end? There are hardly any competitors left at the end, and new comers will take years to play catch-up, and we gain the priceless reward in becoming the market leader. Most importantly, we have gotten the content and the users; content attract the users, and users attract the merchants (and profitability).

Jeff Bezos said, “It’s all about the long term.  If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow—and we’re very stubborn. We say we’re stubborn on vision and flexible on details.” - Source: Forbes

In Malaysia’s context, the idea of pouring hundreds of thousands and taking 3 years to make real profits might be unbearable of most investors. The idea of food hunting using websites (or mobile applications) is quite alien to users above the age of 35 (they like to read reviews on newspaper, and ask for advice from friends). Thus, most investors would think I am a young ciku who know nuts about business. Then again, I still have a lot to learn.

In the meantime, we will make Malaysia Most Wanted the ultimate gateway to all Malaysian food and restaurants; provide satisfactions to all the foodies out there.

My Last Bite at Government Grant

Hi, I am Desmond, and I am jinxed with Government Grant applications. For the past 6 years, I applied for 4 government grants (from 3 different agencies) and entered a reality TV pitching show, and all of them sunk. You can read about my journey.

In the early years, I thought I am half-hearted with no track records, thus I fail. Then I manage to develop a service with great traction (self-funded), yet they still doubt my capability to venture into new markets and criticized my inability to monetize on the traction. When I mentioned Twitter secured millions of dollars in funding, with hundred millions of users, considered wildly successful and still hardly profitable: everyone keep their silence because they can’t come up with a reasonable answer, but I know none of them agree with the statement. I was asked why I have 300,000 visitors and still can’t make great profit, and waiting a year before profit comes in is labeled as “pathetic”. I try to explain to them that this is not a software product which you can profit immediately per sale, this is consumer web (product > traction > trial & error / pivot > maybe profit): and I know none of them understand what that phrase means.

At the end of the day, government grants are KPI-based to improve the country’s GDP (towards the ETP): so you need to prove that you can make tons of money, or already making tons of money (Ironic, isn’t it?). They are not going to invest in Twitter or YouTube which can’t generate great profitability in the early years, in regardless of how many users you have. Government grant is about short term profitability (will be better if it’s proven profitability); but there are some exception. Why TryMasak is portrayed as a success story for ICON fund? Traction? Profit? Perhaps is the collaboration with MOSTI, ability to watch cooking video on Hypp TV and featured on Malaysia Book of Records.

Forget about what Silicon Valley taught us about 1) Team 2) Product 3) Traction, it doesn’t work for government grant in this country (it’s like some weird idea from a different world. I dunno what are these crappy stuffs? Show me the money!). Though I suspect the forth element, social proof, might still work very well. If you are like me, who have no connections with the “right” people; don’t try to focus on the product or tractions, and don’t even try to promote your team because we are all crappy little minions begging for money. I am not encouraging this, but I guest boasting about your current profit or instant profitability within the next 6 months is something they would like to hear; and perhaps some partnership with big names like AirAsia, Maxis, and TM would ring the bell as well.

Government grant evaluation panel nowadays include “industry expert” besides a bunch of bureaucrats, which sounds more promising, but not quite so. These experts might not be entrepreneurs themselves, perhaps managers or CEOs (which have a very different mindset from entrepreneurs, but confident of their personal achievement due to the 5 figure monthly salary). I am guessing none of them have experience with business like Google, Facebook, Twitter, YouTube, TripAdvisor, Yelp!, etc.; and I am not sure if they even read about them, or at least use them. There is a high probability they might still be traditional-minded: build some product with 3-6 months, spent tons on marketing and branding, sell like hotcakes and become profitable. Spending millions and years before profitability is just crazy, something they genetically couldn’t comprehend.

My conclusion is:

1. The expectation and benchmark of Silicon Valley VCs are different from local government grants. So it's Product + Traction + Team vs Profit.
2. At the end of day, it’s all about proven profit and fast profit (within 6 months – 1 year, not beyond). They are not interested with traction, though they might criticize you if you don’t have it.
3. Although they say there are looking for the next Google, but we know they won’t invest in Google during their early days (for God’s sake, they don’t even have a business model then, forget about profitability). So do something proven, especially proven locally; so that they could smell the money.
4. Know the “right” people. Social Proof works globally. 
5. Sometimes it's like selling a bat to a golfer; or Tech and Business person speak a different lingo (it's like why Man couldn't understand Woman). Choose you investor wisely, if there is a choice.

I hope I learned the final lesson from the grant applications spree, which cause a lot of distractions. I conclude that they are not interested in my kind of startup: focus on content and user tractions, not proven business model locally and no proven or instant profitability. I do admit I didn’t focus on monetization, because I felt that someone could do a better job than me, so I focus on what I do best (my theory is, the inability to monetize doesn’t means the platform has no value). More work required here.

Am I being delusional or arrogant here, sometimes I asked myself? My brother said, “If you still know how to ask yourself that question, you are pretty much safe.”

What’s next? Do more, complaint less. If I don't believe them, the next thing to do is to prove them wrong :) Malaysia Most Wanted Rocks!

 Be so good they can't ignore you - Steve Martin