The ‘Add an S’ Principle

AKA last mover advantage

AKA last mover advantage

My Mom has an incredibly vast vocabulary.

I love doing things with my Mom.

Naturally, these collisions of interest led us both to the game of Scrabble. As a kid, I’d find moments to fit in games, usually a matchup of titans that also included my younger brother.

My Mom would always play very unique, impressive words with solid point values. Quorum comes to mind. Her words would often draw ‘oohs’ and ‘ahs’ from my brother and me for their creativity. Her strategy was to win through sheer mastery of the English language.

I have a different approach.

Between turns, I scrutinize my opponents faces while they react to the letters they drew from the restock bag. Any tile worth in excess of five points is sure to evoke a slight smirk from my Mom.

But there is only one letter that I want to see in hand after reaching into that noisy pile of little wood tiles: the S.

This is what an S looks like.

I stockpile these nuclear weapons in my war-chest and wait for just the right spot in the board to appear. Maybe Mom placed Quorum right before a triple word, which just so happened to line up with the tail end of my brothers Zit.

My fingers are quivering with anticipation the moment before I expose this dream killer. I’m getting my TI-89 out of my school bag just to handle the massive compute power the score I’m about to earn commands.

I swiftly slam down the single point S. I confidently relay the number to my brother, our official game accountant, so that he can add it to the overall tally.

‘That one is worth 81.”

My deflated counterpoints demand that we consult the Scrabble Elders of Yore to assess the legality of this seemingly unjust manipulation.

To them this is unfair leapfrogging. To me, it is pure art.

Okay, now here is the startup advice you came for…

Don’t build the board, fill gaps.

Most of the companies that you’ve heard of have applied the ‘Add an S’ strategy to their own marketing. For example:

Airbnb ‘S-ed’ Couchsurfing.

Facebook ‘S-ed’ Friendster.

Google ‘S-ed’ AltaVista.

Startups are not built to spend all their cash on customer education. They are supposed to spend it on customer acquisition. These two are easily conflated, yet they are definitly not the same thing. For example, TiVo was a $200m customer education exercise that paved the way for those knockoff Time Warner DVRs to acquire all their (now wonderfully educated) customers.

I’m not arguing here that customer education is inherently evil. What I’m saying is that education is a strategy designed to eventually transition money from your customers wallet into your bank account (not someone else’s).

If you sell a product before anyone deeply feels the unmet need it solves, you’re unfortunately going to be spending a boatload of money making them start feeling it. You’re going to be building the whole Scrabble board from scratch.

Another way I envision this idea is via the Palm Islands in Dubai. 99% of the sand that those dredgers scraped off the seafloor to dump into mounds off Dubai’s coastline was below the water. Only the last 1% of sand poked up above the waterline to form the actual land.

1% of the sand for the 1% of billionaires.

If you find that it is going to take too great an investment of time and money to incept your customers into acquiring a taste for your product, just pivot. In all likelihood, someone bigger and better will wait in the shadows and swoop in to steal that customer base from under you. Sure, if you move fast enough maybe they’ll acquire you instead, but ‘let’s cross our fingers and hope we get bought’ is not a strategy. That’s just a common case of startup irrationality.

Do not run your startup in a manner that requires you to run run run as fast as you can so that you might get bought by the Bezos Man.

Instead, scale as if you need to become an actually functional business with a clear path to market saturation, independent of any acquisition scenarios. In my view, you can’t do that if you are spending all your time on heavy handed customer education in the market you think you want in lieu of acquiring customers in a market that already wants the thing you can make. You have to be sneaky, you have to go out into the market and look for opportunities to Add an S.

Uncover that stagnant industry that has not been Warby Parkerized. Reconfigure an asset class that has not been Uberized. Attack that bloated sector that has not been SpaceX’d. Ask yourself what are the cleverest ways to solve an existing need 10x better on a dimension customers will still care about 10 years from now.

Find your gap, build your game piece, and go find that TI-89 to start counting your profits…

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