The power of looking for patterns that don't match

Pattern matching at it's most basic is about finding things that seem to fit together. 

In venture capital that often means looking at startups and interpreting what works well, or what makes a good entrepreneur. There are plenty of problems with the method - Chris Dixon wrote about a few of them in 2012, and there is significant research that suggests that pattern matching through things like gender and race may unconsciously lead to much narrower ideas of what works, and poorer outcomes for picking winners.

But one of the things that's not dug out as often is that looking for patterns that don't match is a valuable skill. Another way of thinking about it is: everyone wants to know what makes a winner, but not enough people want to know why something doesn't work, why a pattern you expected to fit, simply doesn't. As it turns out, those tend to be the underpinning to finding patterns that create growth in a company (and probably as an individual, too). 

For example, one of the most complex questions in an early stage business is: we've found something that works, but how do we know it will last? You can pattern match your way to more users or customers ("hey this works let's do more of it"), but unless you're paying attention to which patterns don't match, you'll likely get hit hard when a tactic doesn't work. There's a very small peek at that struggle in a recent update from Mike Wilner at Compass, which matches designers/developers to small business owners & entrepreneurs who need a smart, basic website.

Both sides of the coin are important. You have to be willing to seek things that don't make sense, because they can help you hedge against your own unconscious bias. And it increases your ability to see things at a much larger scale, instead of simply chasing things that fit what you've already run into. 

Delivering value in design vs. engineering

Ken Norton published something the other day called 10x not 10%.

If you’re not familiar with Ken, he was a long time product manager at Google and is now a partner at Google Ventures where he works directly with their portfolio companies on engineering and product. 

In the piece he talks about Kodak, and the concept of risk in product development and design. It’s worth reading in full (including the references) but it got me thinking about something else: how online platforms weigh design vs. engineering. 

Early stage companies often struggle to balance the two. A good core product that delivers value is worth a lot even if it’s not sexy. But, of course, you’ll eventually need good, clean UI / UX design in order to deliver your product to a larger audience. There’s value in that, too. 

My experience is that the relationship between engineering and design works on a spectrum, but that spectrum is very different based on whether you’re going for 10x or 10%. If you don’t know which you’re aiming for it can really mess with your product. 

More simply, if you are providing 10x value via engineering you can get away with design being clunky, sometimes for a very long period. But if you’re aiming for the 10% increase in value, than design + user experience + on-boarding are most of the battle. 

One Growth Metric to Rule Them All is fine until you’re building a company

Finding and increasing growth is critical to an early stage business.

But it’s also hard to explain, and on the surface it can look very tactical: you isolate something that works, then test to see how much you are able to increase it. 

If you’re good you’ll work on a bunch of these tests at once, and funnel them into one metric that drives all of your efforts, and revenue. That one metric is often something like average daily use (DAU) or how likely they are to refer a friend (using net promoter score or similar). The key is to focus on a metric that drives your core business, and rises all of the other metrics, including revenue. 

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