More Constraint = More Focus.
How the Downturn Can Fuel a Successful Launch
author
Bobby Mukherjee

The tech-market downturn is real, but it’s not the “RIP Good Times” economic tragedy you might think it is. In fact, current conditions add up to a once-in-a-generation opportunity for success. The key is understanding that lean times are often better for innovation than boom times and success comes not from abundance but constraint.

Crazy? No way. Here’s why.

Freedom of Constraint

As CEO or founder, you’ve given your company a compressed runway to launch. Starting with a time constraint is good! Now you need to make smart decisions about capital spending to get airborne without going broke or pulling out your hair. Less access to funding might seem like an impediment, but it’s actually the opposite.

Don’t believe me that constraint is a gift? Try this mental exercise: How many combinations are possible from arranging six eight-stud Lego bricks? The answer… 915,103,765. WOW! The math required to calculate that number is impressive but the number itself stops me in my tracks. Even a rather modest starting point explodes into too many combinations, too many permutations to fathom. Would you rather figure out which of those 900 million+ combinations will lead to success or pick from nine?

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“How many combinations are possible from arranging six eight-stud Lego bricks? The answer… 915,103,765.
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Or consider Top Chef. The reason the show limits the ingredients available to contestants is because it would be seriously dull if it didn’t. (Imagine watching a chef spend 30 minutes in the produce section of a grocery store.)

Constraint forces focus, focus brings clarity and clarity can lead to a genuine breakthrough. Really you could say the same about any contest: The rules are restrictive, but the rules are what make playing the game worthwhile in the first place, and what makes winning actually mean something.

My favorite idea about the power of limitations comes from Frank Gehry. Gehry designs buildings that seem boundless in their imagination, but he credits constraint for his best work. He says an 85%-15% relationship between constraint and creativity produces optimum conditions for him to deploy his genius. That’s a rather narrow channel, but there’s no question that it leads to astounding results.

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85%-15% relationship between constraint and creativity produces optimum conditions for him to deploy his genius.”
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You can find as many examples of brilliance born from limitations as you want. Get intimate with those that speak to you. Embrace the truth that your down position might just unlock the future of your company. Because when you have to deliver the news about diminished funding to your employees and convince them it’s a positive development, it helps to believe it yourself.

We’re all familiar with the converse of the freedom of constraint because it’s been the norm throughout recent memory (aka ever since the last downturn, haha). In a funded startup during what I call the Age of Affluence, you were given the directive to throw money at expensive bells and whistles that may or may not have anything to do with your actual product, because spending justifies funding. It’s an exciting but often fruitless phase that stems from the Paradox of Choice, where options are so unfettered that you can’t figure out what’s essential and what’s excess.


Your Forever Thing

Your first step with your less-is-more mindset will set your course from now to launch. This critical juncture reminds me of a quote from Andy Grove, the brilliant CEO of Intel who passed away in 2016 and once said, “Bad companies are destroyed by crisis; good companies survive them; great companies are improved by them.” The downturn is a chance to achieve greatness. To get there, you need to determine the product or service your company offers that is absolutely essential. The thing only your company can produce. Your Forever Thing.

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“The downturn is a chance to achieve greatness. To get there, you need to determine the product or service your company offers that is absolutely essential. The thing only your company can produce. Your Forever Thing.”
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For Amazon that thing is rapid home delivery. For Uber it’s economical rideshare; for Coca-cola it’s Coca-cola. Finding your Forever Thing helps you survive now, and it can evolve into more things later. Indeed, in many cases a company’s Forever Thing was not the first thing that company was built for. But whether you know what it is or are experimenting to find it, this determination is crucial at the moment of inflection. Knowing the one single thing you can and should be doing is comforting and drives momentum. Everything else becomes unnecessary.

It’s like that scene in Apollo 13 when NASA engineers on the ground had to literally make a square peg fit into a round hole using nothing but the items on board the lunar and command modules, which were orbiting the earth. They succeeded in this seemingly impossible task, saving the lives of all three astronauts aboard. Similarly, your limited components must lead to a breakthrough, otherwise all is lost. Now, go!


Let Customers Decide

Once identified, serve an early iteration of your Forever Thing to customers as quickly as possible. Customers will assess your product in ways you can’t.

I can’t stress this point enough: Chances of hitting the bullseye on your first shot are astronomically slim. Ever heard of Tiny Speck? No? That’s because it was a failed gaming company that led to a far more successful SaaS product called Slack. (Feel free to slack that tidbit to your team.)

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“Customers will assess your product in ways you can’t.”
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The earlier you begin collecting user data, the earlier you can reconfigure your product to its highest and best use. You can establish your Forever Thing early on, but you’ll never stop refining the route to get there.

This process of testing, adapting and iterating requires spending money, and spending it well. In my experience, you should spend no more than 30%-50% of your budget to release v1 into the wild. The remaining 50%-70% is for iterating. Too many companies put 90% or more in the v1 basket and run out of capital before they can adapt their product.

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“you should spend no more than 30%-50% of your budget to release v1 into the wild. The remaining 50%-70% is for iterating.”
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You’ll benefit from a robust iterative process, so make financial room for it. It’s a humbling experience, but remember: Even though you wear a black mock turtleneck you’re not Steve Jobs. And heck, even the iPhone was the result of tech’s most effective iterative process. Despite the romance (and ease) of an-apple-falling-on-Newton’s-head epiphany, true genius is intentional.

User Data

3 Good Takeaways

1. Embrace constraint.
The reason there’s a million ways to express the idea that “less is more” is because it’s a powerful truth. It’s also a business axiom that’s easy to forget when the market is flush. Limitations are only limitations if you perceive them that way.

2. Find your Forever Thing.
You need a very clear idea for your company to get funding and attract talent. You should be able to state that idea in a single sentence. The process of developing it can change over time, but the idea should be eternal.

3. Spend wisely and plan to iterate.
Customers aren’t necessarily always right, but neither are you. Business is an evolutionary process. For the most obsessive of us, it’s never done. Spend half of your capital to reach your core customers quickly and the other half once you know what they love.

Bobby Mukherjee
Bobby Mukherjee is the founder and CEO of Loka, a Silicon Valley-based software consultancy, focused on helping the most ambitious companies ship their innovations faster. Loka serves a wide variety of customers, from startups funded by the likes of Sequoia and Greylock, all the way up to Fortune 500 brands. Prior to Loka, Bobby started and successfully sold two startups, including one which was acquired by NBC. If you have a digital project that’s keeping you up at night, reach out at hello@loka.com
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