THE BLOG
06/26/2014 12:43 pm ET Updated Aug 26, 2014

The Secret to Startup Success is 3D

Over the past 20 years, I've had the privilege of being at the forefront of the renaissance in enterprise software. The birth of SaaS (and all other things 'as-a-Service') has revolutionized the way work gets done in the modern business, thanks to the advent and widespread adoption of cloud computing.

As a long-time B2B guy, no doubt many of my colleagues and associates were somewhat surprised when I took what probably seemed like a drastic diversion to launch Trusper, a consumer-facing mobile app and community where users share DIY tips and tricks covering everything from makeup application to gardening to dating.

But for me, it was a natural convergence of my two strongest passions: I'm a software product developer by day, but in my free time, I've always been a big fan of anything DIY. I love watching HGTV, working in the yard and doing home improvement projects. In fact, after one of my neighbors hired a contractor to turn their backyard into a USGA golf green at an obscene cost of $350,000, I decided to go the DIY route using a videotape and standards booklet I downloaded from the USGA website. My total investment: $5000 for labor and materials, plus $20 for the USGA guidelines and a bit of sweat equity.

What I've learned in making the transition from B2B CEO to B2C CEO is that, despite how different the two worlds may seem, surprisingly, the same principles of good product and business strategy apply. It's what I call "The Viral Cube" -- the three dimensions required for any product to achieve success and go viral.

X=Word of Action: We're all familiar with the concept of word-of-mouth marketing. But, what's even more valuable than getting your customers to tell their friends about your product? Getting them to use it. Spur them to take action. Involving them in the use of the technology is critical to propagation. Groupon is one example in its early days -- it requires a critical mass for the deal to be "on," so naturally users will get their friends together to take part in the shared deal. Messaging apps like WhatsApp inheritably multiply thru usage.

Y=Frequency of activity: In order for a product to catch on like wildfire, it has to be related to an activity that target audiences perform frequently. This is exactly why the DIY makeup tips on Trusper have become the most popular and most widely-used category in the community. Millions of women wear makeup in some form practically every single day, making it an extremely high-frequency activity and thus a vital component of the viral cube.

Z=Mass appeal: Successful products, whether B2B or B2C, must have a broad, universal appeal and fill a void that exists across a wide market. Salesforce.com is the perfect B2B example. CRM and lead nurturing is universal need in virtually any B2B environment, regardless of industry, niche or vertical market. On the B2C side, the GasBuddy app is a great example because of the massive number of drivers and the universal desire to save on fuel.

As an investor and entrepreneur, I look specifically for products that fulfill these three critical dimensions, but I also look to invest in people who meet a specific set of dimensions as well. In my experience, these traits are perhaps just as important as the product itself in evaluating investments. The most promising entrepreneurs must be willing to:

  • Challenge the status quo: As an entrepreneur, it's absolutely critical to question everything, challenge the norm and not only disrupt the marketplace with your product, but also disrupt the typical ways of doing business. As I was building Baynote, our rapid growth dictated that we move to a larger office. So, I did what every CEO would do: I called commercial movers for a quote on tearing down, moving and reassembling our cubicles in the new space. I was stunned at the cost: $800 per cubicle! Most people would have just spent that money, assuming that's the going rate. But, we challenged the status quo and hired a residential mover instead. Same cubicles, same distance moved, same exact work -- only it cost us just $1000 to move the entire office, a whopping 12x difference.
  • Have a DIY attitude: Similarly, when it came time to find larger space to accommodate Trusper's growth, I started down the traditional path, contacting commercial real estate brokers. Every listing was, in my opinion, extremely overpriced starting out at least $10,000 a month, and landlords were greedy, asking for a 1-year deposit upfront. No wonder launching a startup is so expensive! I decided to do a little independent searching on my own -- using Craigslist. I found plenty of reasonably priced, outstanding locations with full service, and we're paying just $1500 a month. I instantly cut our overhead costs by 85 percent, just by taking a less conventional route. As an investor, I look for entrepreneurs who are willing to take matters into their own hands and devise creative ways to overcome challenges. Experience and professional credentials are often very overrated in the world of tech and innovation! The traditional thinking of hiring someone with a lot of experience or a "professional" isn't always the answer when it comes to innovation or the success of a startup. And, sometimes the best way to get something done is to roll up your sleeves and do it yourself.

Launching any new venture, B2B or B2C, requires determination, perseverance and relentless passion -- for your product, but also for your customer. In my experience, the most successful products will invoke all three dimensions of the viral cube, but without that connection to the customer, that fundamental understanding of their pain points and how you can solve them, it will be just one more in a long list of great ideas that never quite reached their full potential.