Twitter Teaches Startups to Hunt Their Fail Whale

Which scenario would you rather face as the CEO of your recently launched startup company? :

• Scenario A | Not being able to keep up with customer demand

OR

• Scenario B | Having scaled your business to meet expected customer demand

Well, personally, the answer is a no-brainer … it’s Scenario A.  You may think, “Well why would you rather be unprepared and unable to deliver?  Wouldn’t it be better to forecast and prepare for the future?”
Quite frankly, I don’t believe that it is.  Remember, I’m talking about a startup company, where cash is king, and it’s a matter of survival.  Odds are, you just do not have the resources to blow on hiring more employees, more office space, and the numerous overhead costs associated with growing a fledgling startup.  More importantly, your conservative projected forecasts are likely wrong anyways, so why scale up before you really need to?  Instead of worrying about the future, heed this simple (and most likely, obvious) advice:

1. Treat cash as your company’s oxygen; if you run out, your company will suffocate and die.  This will cause your company to operate as scrappy as possible, making you think twice about spending hundreds on those rad new business cards and gold-foiled company letterheads.
2. Focus on your core product/service.  It’s easy to get caught up in adding extraneous product features or unrelated services to an existing company’s business offering.  Worry about the extras after you have achieved 50% of your first year sales projections.  [This will take longer than 6 months, by the way].
3. When it’s ready, ship [or release, launch, open...depending on your business].  Don’t ship when it’s perfect, because your product will never be perfect.  It’s impossible to be perfect without having a single customer.  It’s more important to release and start amassing customers.
4. Continue to gather as much customer feedback as possible, then, collect more.  Your customers are the lifeblood of your company, and they will have insight beyond your biased viewpoint.  The customer will likely see your business in a completely different light than you do; it is crucial to understand their sentiments, digging and mining for the gems that will help you improve their experience.

These points are not revolutionary by any means, but they are easy to overlook in your pursuit to change the world.

It’s understandable why companies would prefer to be in Scenario B.  CEO’s [founder, owners, whatever] don’t want to give their customers the sense that they are running an amateur operation.  To combat this, they will, in my opinion, overcompensate to create the perception of an operation that is well beyond its true size and/or capabilities.  While creating this perception, companies are apt to spend money outside of their core competencies.  This is the beginning of the end for startups.

Micro-blogging revolutionary, Twitter, shows startup companies a very important lesson: Being underprepared and/or overwhelmed with the amount of new customers will not demolish your business. In fact, it could result in the opposite effect.  When Twitter’s user base began to climb, the service was unable to scale quickly enough, creating a series of service downtime.  During these times, Twitter would feature the now iconic “fail whale” overcapacity image.  Many stories and posts were written about Twitter’s shortcomings and their inability to handle the influx of users.  Despite a brief period of negative press [depends how you look at it] and some annoyed users, Twitter is now one of the hottest new services to date.

Twitter "Fail Whale" Screen

The “fail whale” did a few things for Twitter:

1. It gave Twitter press [positive or negative, you be the judge].
2. It showed that their was enough people signing up and using the service to sporadically bring it down.
3. It allowed people [especially their early adopters] to rally and root for their underdog.
4. It expressed honesty and gave Twitter legitimacy among its users by not hiding behind its deficiencies.

Author, entrepreneur, and venture capitalist, Guy Kawasaki writes the following in his book titled ‘Reality Check’,

I have never seen a company fail because it couldn’t expand fast enough.  I have seen many companies – I won’t mention their names to protect the guilty – die because they “invested in the future” and “spent ahead” to avoid missing an opportunity.  Once in my career, I’d like to invest in a company that can’t scale fast enough for its orders.  That’s an easier problem to fix than lackluster sales and adoption.

-Guy Kawasaki

How will you surpass your projections?  How will you outperform the limits of your business?…

How will you achieve your “Fail Whale”?