Early adopters are a critical component to any startup environment.  This particular demographic is unlike any that a company will face in the future.  It’s the early adopters who are first to interact with a company’s initial product or service.    It’s the early adopters who represent a company’s first fan or first critic.  It’s the early adopters who can open the eyes of the closed-minded entrepreneur.  It’s the early adopters who have the ability to drive a company into unforeseen directions.  It’s the early adopters who tell it like it is.  So what does it mean to be an early adopter?  Quite frankly — it means a lot.

For many technology enthusiasts, being an early adopter comes naturally.  This crowd eagerly jumps on beta releases, private invites, and all other forms of limited activation events — commonplace within the dot-com arena.  In an industry with so much transparency and so many options (the closest industry to being barrier free), it’s easy to see how powerful this group can be.  Twitter is a great example of how a group of early adopters transformed a fledgling company into super-stardom.  I doubt even the most ambitious Twitter founder could have predicted how the early adopting community would utilize the simple messaging platform.

Where Do Early Adopters Stand?

The early adopter crowd represent the gatekeepers between the firm and the “early public”.  Needless to say, a positive reaction at this stage in the game can only improve the firm’s strategic position.  However, the early adopter crowd seem to possess a powerful double-edged sword.  Along with boosting company and product awareness through praise, the early adopters can bring user adoption to a halt through negative rants and dismal product reviews.  Although representing only about 5% of the target audience, (according to my not-so-scientific math) this group’s influential capacity is off the charts.

Should Companies Cater to their Early Adopters?

Despite the massive influence that early adopters possess, I advocate against catering to them.  Instead, companies must focus their energy on constantly improving upon their core competencies (which is what every business should do).  It’s in the best interest of the company to utilize the early adopter crowd, taking advantage of real-world interaction and early customer dialogue.  For it’s this crowd who you must ultimately impress.  Without “the approval” from these dedicated customers, your company will likely remain hidden from the masses.  Since early adopters possess  a deep understanding of the marketplace, they know what type of offering a given company should be delivering.  Startups should listen to these smart consumers, but let me stress this one more time: never cater to any particular crowd — doing so will cause the firm to lose focus as well as their true identity.

Bad PR is Still Bad

There’s a misconception that there is no such thing as bad PR.  Maybe that’s true for a moment or two, but eventually, bad press will catch up to any company.  I cannot think of one impactful company who has made their name off of negative press.  Long-lasting, innovative firms are built from within, not through marketing budgets, advertising campaigns, or a few abusive headlines.  Entrepreneurs must keep this in mind at all times, especially throughout the infancy of their struggling startup ventures.

In case there were any contradictions or misunderstandings throughout the post, these three bullet points should summarize the fundamentals:

• The early adopter crowd is an important demographic in any upstart, however:
• Companies must learn to utilize this crowd instead of catering to them.
• Startups must always remember that success is produced internally, never externally.

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”?

The number of technology startups is quite staggering.  This, of course, is a result of virtually no barriers to entry and a relatively low production cost that’s associated with tech startups (namely dot-com businesses and services).  But what separates those popular (mainstream) startup services from the “soon forgotten” ones?

It’s a matter of stickiness…But what makes something sticky?

There are a number of factors that contribute to the “stickiness,” or staying power of an online service.  The first lies in the power of early entrants.  Not surprisingly, it helps to be the first to accomplish something new.  Twitter is a fine example of an online service who is feeling this competitive edge first-hand.  Launched in 2006, Twitter has seen tremendous adoption from the online community, legitimizing the micro-blogging platform it has essentially invented.  Since its launch, there have been many imitators, but none have seemed to garner the attention that Twitter has been able to obtain.  Digg falls into this category as well.  After popularizing the social-bookmarking and content-sharing platform, Digg has built up a dedicated userbase.  Many imitators have launched similar style websites, but have been unsuccessful in gaining the same following.  Being first often makes you sticky…initially atleast.

The second “stickiness” factor is execution.  If you aren’t fortunate enough to be the first to enter the game, you had better execute.  Google exemplified proper execution when they created a better search engine than than their competitors in the late 90s.  Facebook was not the first social network, but it was Facebook’s execution that ultimately made it the #1 social network that it is today.  It goes without saying, stickiness clings to the services that deliver.

The third factor is simplicity.  There is no reason for web services today not to be super-intuitive.  Internet users today expect to be up-and-running in a matter of minutes.  What is the reason that Myspace has taken the backseat to Facebook in terms of total unique visitors?  In my opinion, it has a lot to do with simplicity and ease-of-use.  Facebook absolutley crushes Myspace when it comes to social networking because of the differences in design and functionality.  Simplicity is a huge stickiness factor.

The fourth factor is of stickiness is not entirely controllable, but very important; that is, the network effect.  Today’s web 2.0 applications are only sticky if they are able to attract a huge network of users.  This network effect, which has been debated and analyzed time and time again may be the most important stickiness factor of them all.  If the users aren’t there, the service will likely falter.  A service needs an active community to remain sticky.

Can you think of any other factors that contribute to a web services stickiness?