Play Bigger — A Must-Read for Startup Founders

Play Bigger is a must-read new book for founders. I believe that its ideas and frameworks will be relevant to the next ten years in the same way that the ideas of lean startups and customer development were to the last ten.

Why do I think this? First some context:

The Lean Startup Revolution

About ten years ago, savvy entrepreneurs began to discover that the costs of starting a company were collapsing. Open source software, pay-as-you-go web services, the cloud, offshore labor, ubiquitous broadband penetration, and online/social platforms for sales and marketing made it so that “$500,000 was the new $5 Million.” The two books that captured the zeitgeist of this were intimately related. The first was The Four Steps to the Epiphany, by Steve Blank. One of his proteges, Eric Ries, built on his foundation with The Lean Startup. We were lucky enough to have a front-row seat at the birth of these ideas. Ann Miura-Ko taught a class with Steve Blank at Stanford, and it was Steve who introduced us before we teamed up to start Floodgate. Eric Ries was also a Consultant at Floodgate before he coined the term “Lean Startup” and decided to write a book.

Watching Customer Development and Lean Startups take off over the last decade was exciting. Not only did these books become business best-sellers; they influenced tens of thousands of startups. Words like “minimum viable product,” “customer development,” and “product/market fit” became mainstream startup vernacular. The number of startups and the ability of founders to iterate intelligently exploded. And the financial markets followed the entrepreneurs. Micro-funds (like Floodgate and FirstRound Capital) and Accelerators (like Y Combinator) can be traced directly to the same insights.

There are occasional criticisms of these frameworks, and some founders have misused and overused them. But overall, the impact has been overwhelmingly positive. Entrepreneurship has improved. Innovation has become ever more democratized.

However…

Product/Market Fit is still critical — But it’s no longer enough

Fast forward ten years: Times have changed. What was new a decade ago has become mainstream. What was once a novel insight has become common knowledge. The downside of low barriers to entry for startups is the same as the upside — Low barriers to entry. The democratization of starting companies has led to too many startups. Way too many. Customers, prospective employees, investors, and many others now struggle to make sense of which companies matter in a very noisy and crowded startup environment. The startups that can’t break through this clutter won’t survive, much less create enduring value.

Racing to product/market fit is still necessary, but it is no longer enough. Savvy founders in today’s world need to focus on company design and category design in addition to product design.

Enter Play Bigger

So now we come back to Play Bigger, a book written by four colorful characters named Dave Peterson, Christopher Lochhead, Al Ramadan, and Kevin Maney.

This book, in addition to being a very fun read, points to new frameworks for thinking about Category Design and Company design in addition to Product design. I believe that the “6/10 Law,” “Category Kings,” and many other concepts discussed in the book will be meaningful to founders in the next ten years the same way the terms “minimum viable product” and “product/market fit” were in the last ten.

The more startup pitches I see, the more convinced I become that company design and category design need to happen sooner than later.

Discussing these issues in depth is probably too much detail for this overview post. (Read the book if you find the topics interesting :-) ). But at a high level, Company Design involves laying the foundation now for rapid scaling later, while hopefully avoiding management debt and technical debt down the road. When a founding team is engaged in company design, they develop proactive answers to questions like: Are we going to proactively define our culture or just let it happen? Do we have an explicit description of our culture? Do we have specific mechanisms to connect it to our business? What types of team meetings do we have to stay in sync? What should get covered? What should not be covered? Do we have a strategy to build “hot teams” that act empowered and can massively outproduce our competition? Do we have basic forecasting frameworks and dashboards to help us zero in on the right parts of our growth story? Do we have a compensation strategy that clearly defines the role of salary, bonuses, and options and their connection to company building, or are we just competing in an auction for the best people like everyone else? How do we leverage our Board?…as a set of people to present to or as a set of people to amplify our growth strategy and momentum?

Category Design involves taking proactive steps to become a “Category King.” Category Kings don’t just make something to sell to people; they introduce the world to a new category of product or service. They replace our current point of view with a new point of view. Steve Jobs’s second act at Apple was largely a story of creating new categories: The pocket digital music player, the smart phone, and the tablet. Amazon AWS created a new category of dynamically available services in the cloud. Salesforce, with it’s “no software” mantra, created the beginning of cloud-based applications. Lyft and Uber created the category of ride-sharing and TNCs. Category Kings even exist outside of business….such as Elvis Presley, the original Category King of Rock and Roll.

Category Kings win because they ultimately change the way people and businesses decide to spend their money. Starbucks achieved this by convincing people that they should spend $4 for a latte rather than 50 cents for a cup of coffee. Apple convinced people that they should buy into their entire smart phone ecosystem rather than treat a phone like a widget that gets bought every now and then. I bet some of your remember, before the iPhone shipped, there was a cool new phone every year. If Nokia had the best phone, I bought it. If the Motorola RAZR was the cool phone at the time, I bought it. But once the iPhone shipped, and the smartphone category was born, I became an iPhone person. My point of view had changed: The only question I’ve asked since 2007 is “when should I upgrade my iPhone?” I believe that Tesla is on the verge of achieving something similar in electric cars by causing people to buy into their entire “system” of the car, the software updates, the supercharger network, the auto-pilot that learns and adapts from other cars, etc. And how many of you took you first Lyft or Uber ride and said to yourselves “who needs taxis anymore?” These are all tangible examples of category creation at work.

Because Category Kings change our point of view as well as our spending patterns, it should not come as a surprise that Category Kings generally capture 70–80% of the profit pool of the categories in which they lead.

It is now so easy to start a startup that we have to play bigger…We have to care about starting and building something great. We need new ideas to build on solid foundations. The race to product/market fit is necessary and critical, but it is now just the ante to the game. The stakes are higher and the other players are better than ever before. Play Bigger matters because it helps founders play for bigger stakes and more significant impact — it helps entrepreneurs see the opportunity to build an exciting company and category in addition to a killer product.

Congrats to the PlayBigger team on a remarkable effort. It was fun to have the chance to work with you on some of the ideas in the book. You have made an important contribution to the legendary founders of tomorrow.