Howard Lindzon, hedge fund manager, investor in Twitter, constant critic (deservedly) of CNBC and blogger, had one of his usual market analysis posts this morning. In each of Mr. Lindzon's opinionated posts there is always a single gem of wisdom, unless you are actually interested in understanding the stock market (which he discusses thoroughly and insightfully on an almost daily basis). Today's gem was the following quote:
"People love to make things difficult."
If you have read this blog for awhile, you have hopefully come to realize that I am a simple (simpleton?) thinker. I do not have the kind of mind that can analyze problems in sixteen dimensions. In fact, more than two or three dimensions to a problem and I get short tempered and a bit surly. Complexity drives me crazy. My startup and early stage clients, on the other hand, seem to heartily embrace complexity. Two examples will illustrate my point.
- A struggling, very cash flow negative client has decided to pursue a joint venture in Japan as the means to turn around the business. I worked in Japan for ten years and arranged five joint ventures there. As one of my staff used to say, "there is no technology yet invented that can measure that complexity of doing business in Japan". Should only take 12-18 months to get a joint venture signed, if it ever does get signed. Not a realistic turnaround strategy.
- Another client is a desktop software company with about 22 free users and no real plan for how to get more users except "raise a big round of VC money". The product development strategy showcases their love of complexity. Launch download version of desktop product, build and launch SAAS version, offer in-the-cloud storage for clients (think Google Docs) and physically distribute software in Europe. And this is just the 12-18 month plan. Maybe they are going to outsource company management to Google or Microsoft.
Two sure ways to tell you have over complicated your early stage business:
- Have an international expansion strategy
- Have multiple product (not feature set) launches in the same year
There are probably sixteen other ways to tell if your business model is over complicated, but let's keep this post simple.
Miami, FL
