Upsides and Downsides

Summary

Every startup founder knows about Geoffrey Moore's concept of "crossing the chasm"–that you have to change your marketing and sales approach as you gain marketshare fit a more conservative buyer. But most fail to internalize what crossing the chasm means when it comes to their product. I recently stumbled upon Adam Mastroanni's post on strong-link problems, and realized that it's the perfect framework for thinking about this shift. In essence, Adam says there are two types of problems: strong-link and weak-link problems. Strong-link problems are solved by looking for excellence in a single dimension. When building a startup or doing drug discovery, it doesn't matter how many times you are wrong, you just have to be right once. Weak-link problems are solved by eliminating failure in all dimensions–it's why the FDA puts standards on the internal temperature of your meat or why you might study the p95 latency of an endpoint. When you have a strong-link problem, you increase variance because you benefit from outliers. You focus on upsides. When you have a weak-link problem, you decrease variance because outliers will destroy you. You focus on downsides. Early stage startups tend to benefit primarily from solving problems of upside. Early adopters choose a startup because it provides some quantum of utility that no other product does. It doesn't really matter how much downside that startup might have, customers pick it because there is effectively no replacement. But as a startup matures, new problems come into focus: uptime requirements, security and access controls, audit logging, cost + performance, etc etc. The downside problems. Many startup teams fail to realize that as they gain marketshare, the problems of their customers shift. The early adopters who once valued variance are replaced by late adopters who care about minimizing risk. Making this change can be really difficult–revenue stalls at 5-10m, product velocity falls off a cliff, churn is up. All because the...