I’m a big believer that a startup’s early existence is about discovering a repeatable recipe.
Once discovered you can then spend a lot of money to mass produce the recipe. But if undiscovered, you waste a lot of money and time on a business that doesn’t have a unique, marketing winning formula.
Like Mrs. Fields Cookies, recipe discovery takes a lot of experimentation, until you ultimately find a list of ingredients and cooking steps that consistently create mouth watering results. More comprehensive then just discovering a business model or reaching product market fit, a successful recipe requires the ability to repeat your results.
When we competed with GoPro it was clear throughout the battle that they discovered a repeatable recipe early in their existence. Sponsoring events that produced jaw dropping video, they aggressively pushed this content everywhere their product was available for sale. Borrowing Red Bull’s formula, the only difference was that GoPro sold you a camera instead of a can of sugar water. Fast forward a decade and they are still using the same recipe of content and commerce.
What made this battle even more difficult was that we didn’t develop a recipe of our own. Instead we kept tasting GoPro’s recipe and trying to figure out how not to copy it. It was a dizzying exercise that never resulted in our own, distinct formula.
GoPro’s ability to discover a repeatable recipe is consistent with most category winning companies.
Amazon has price, selection, and convenience. Uber has delivery convenience in style. Instagram created community that has transcended the virtual world.
Where a lot of startups get confused is that a winning recipe doesn’t have to be an amazing product because unfortunately the best product doesn’t always win. Instead the recipe has to be authentic to the DNA of the founding team, unique to the market they are competing within, and repeatable on a small scale.
Everyone’s path to discovering their recipe is different, but there are often a few traits that are consistent.
1) Authentic To The Founding DNA
The DNA of the founding team matters.
It would have been hard for a non baking loving person to start Mrs. Fields Cookies. They probably wouldn’t have perfected the flavor, started with a single local store, or gone to dozens of banks to get their initial funding. And they certainly wouldn’t of had the drive to spend the hours she spent nailing the smallest details on a path to building a $450M cookie empire.
Looking at the founding DNA of Instagram, community was anchored into their existence with the first hire they made; a community manager. GoPro’s DNA was marketing which tied directly to the founder and the first startup he created. Apple’s DNA was making beautiful products easy to use, which became core to Steve’s very existence.
Being honest about the super power of your founding team is the most important initial ingredient.
2) It Takes Time To Develop
A great recipe takes time and constant iterations in order to identify key ingredients and repeatable cooking steps.
Stephanie Amaruso’s story in building Nasty Gal is a great example. Starting with Ebay she constantly iterated on her listings through the clothes, descriptions, photos, shipping, customer service, etc until she discovered the recipe for Nasty Gal. Ultimately she discovered it wasn’t about the clothes, but instead about the style guide they inherently created that helped girls dress better. Once she understood her ingredients and how to profitably repeat her results she was able to raise a large amount of money to mass produce her ‘cookie recipe’.
If you contrast this to a conventional venture capital model it would say to find an investor that likes your same type of food, raise a bunch of money upfront and then spend that money to discover your recipe. Yes large capital may be required up front if the problem you are solving is incredibly technical. Otherwise adding money to mass produce a recipe that you haven’t yet discovered is a dangerous path to take.
3) Be Unique Within Your Market
Sometimes the best recipes are a mixture of influence from other markets. Similar to how great chef’s fuse the history of different cultures to influence their dishes.
GoPro stood out as a camera maker because their recipe looked nothing like a traditional camera maker. Combining the elements of beverage (on the ground events) with media (interesting content) with consumer electronics (channel) they created a result that no traditional camera maker could copy.
Elon Musk has done the same in competing with car companies. He’s brought the precision of aerospace together with the iterative nature of software with the personal touch found in apple retail. Constantly making their cars better through software he has made buying and owning a car human again.
Finding inspiration from industries outside your own is a powerful way to bring a new recipe to an existing market. Especially when most of the incumbent companies compete with the same recipes.
4) Getting The Economics Right
Along with developing the ingredients in your recipe, is figuring out the basic economics around how you deliver your recipe to customers.
Mrs. Fields opened her own store in 1977, a place most people would never start if they wanted to build a venture scale business. Warby Parker used a school bus and data to figure out which markets would best support future stores, while also realizing that ‘try before you buy’ was a key ingredient to success. Amazon figured out that free cash flow was all that mattered so they built their entire company strategy around maximizing this result.
Understanding success on a small scale is critical to winning on a large scale. It’s the only way you can turn one dozen cookies into two into four into a $450M empire.
Image Credit: Kimberley Vardeman via Creative Commos