95% of the World’s developers don’t have the skills or experience to work for a Series A (or later) company.
Most ideas (even the good ones) don’t make for sustainable businesses.
Like “Dave’s” (not his real name) who sat across from me at a cafe in Kyiv, nearly falling out of his chair with excitement. He was a very fit, middle-aged London banker who had an idea for an iOS app and had hired an outsourcing firm in Ukraine.
$150,000 into his yet-to-be-launched app, he kept saying “I’m certain.”
It doesn’t occur to many first-time product founders that success in this game is all about the team you have. Your ideas are for sh*t.
But here’s the dirty truth outsourcers don’t want the public to know:
Outsourcing is a grueling business that relies on tier B talent managing tier C talent, with 10% to 25% margins, and that doesn’t account for the constant churn as developers leave you for better-paying positions.
Almost every outsourcer I know is working on their own product, hoping one day to leave outsourcing. That’s why 99%+ of apps developed by outsourcers fail.
If outsourcers could build successful products, they wouldn’t be outsourcers.
Dave became upset when, instead of joining in his excitement, I told him “Dave, you’re a great guy but if I could short startups, you’d be first.”
I really got to work on my tact.
However, a few months later Dave sent me a Facebook message with the all too common, “John, I should’ve listened to you… hey can you meet up for coffee?”
What About Marketplaces That Attract Top Talent?
Marketplaces that allow anyone (like Dave) to become a customer do not attract top coders.
Why would top developers be looking to work for someone’s side-hustle idea when elite coders can make 3.5x more (with benefits) working for a VC-funded startup or an Amazon (which hires coders globally and lets most devs work from home)?
Nothing about the claims of online marketplaces (“Hire ex-Googlers to work!”) make logical sense.
Consistent Mini-Pivots Means Killing The Puppy. Often.
Too often founders or PMs hold onto an idea because they’re squeezing it slowly to death like a newly adopted puppy instead of quickly finding a new puppy that actually has product market fit.
Call it luck or psychotic determination, but both of my startups have had profitable exits and nearly all of my clients who I’ve been a growth advisor to have had: an IPO, a Series A investment, or been acquired.
When I think of why “luck” has been on my side, my belief is that it has to do with one core habit I’ve developed with my colleagues over two decades of building, advising and investing in new software projects that I call the CMP model:
Every successful project is a product of Consistent Mini-Pivots based on a relentless collection of data.
Too often I hear younger founders say something like, “We failed because of _______ but we learned a lot!”
I don’t believe failure is anything to celebrate. And most of the time I’ve seen that it could’ve been avoided with CMP.
At my first startup Five9 we were the David versus multiple Goliaths, so we had to come up with a 10x better product with a 3x better marketing strategy using the CMP model with our engineers and marketer.
Based on CMP grew from $0 to $10 Million in annual recurring revenues within 24 months. $20 Million in just 35 months. Quite frankly it felt easy, it was fun (while our competitors used words like “grinding,” to describe their lives).
It just happens that CMP is the exact opposite of how outsourcers operate profitably – they have to give you the cheapest developers for the highest price taking the most amount of shortcuts.
At DoctorBase (our second startup) we beat our direct competitor nearly 3:1 in sales even though they had raised 30x more than us. 30. X.
A very, very famous angel investor passed on investing in DoctorBase because he said “HealthXX has raised so much money we feel they will run away with the market.”
I printed his email and taped it to my laptop.
I removed it when we got acquired. The CEO of HealthXX and much of the founding management team quit.
They were in love with their idea, heck they had raised so much money from so many well-known VCs that they may have even been in love with themselves.
We were in love with the act of searching for product market fit.
CMP. It’s powerful.