Startup turnaround expert Matt Hulett on unlocking growth and surviving in turbulent times – GeekWire
Our guest on the GeekWire podcast this week is Matt Huletta veteran of Seattle’s tech community and the author of the new book, Unlock: 5 questions to unlock the hidden power of your businesspublished by Page Two Books.
We talk about finding the right market segment to pursue, how startups and investors should approach the potential of an economic downturn, tips for competing with tech giants, the role private capital can play. in the recovery of companies in difficulty and the way of thinking about competition. , among other topics.
Read an excerpt from the book and continue reading our notes on the discussion.
This book goes behind the scenes of your jobs in various companies. Is there a story you couldn’t wait to tell in this book?
- The Expedia experience for me was my MBA. I was impressed with how the company attacked the online travel space early on when Travelocity was number one.
- There was this brilliant move that they made from agency hotels to merchant hotels, which basically created a multi-year benefit for the company.
- I have nothing to do with this pivot. It was Rich Barton, Lloyd Frink, Erik Blachford, a bunch of other people. But I don’t think that story has been told. So I had a great time telling this story.
Your first role at Expedia was building their B2B business. We just had some exciting news about Expedia creating a technology platform. What do you think of their evolution?
- The company started off as very entrepreneurial, spun off from Microsoft by Barton and others.
- Then it became very corporate under Barry Diller’s IAC, with a series of independently run businesses under the Expedia Group umbrella.
- Travel is a game of size and scale. It’s important to be big to control how suppliers interact with you, and also to have a scale to spread R&D spending over a larger share of revenue.
- What you’re seeing now is another kind of Expedia that’s really focused on integration and leveraging size and scale together.
This brings us to one of the first questions in your book: “Is the market large and growing? »
- Market size and timing are critical. Many companies do not focus enough on these issues.
- It is important to think not only of the total addressable market, which is often crowded with competitors, but also of the service addressable market, the specific slice which is small and often grows faster.
- Stripe is an example in the book. Rather than trying to compete in the vast fintech space against PayPal and others, they started with startup-focused mobile tech, and grew from there.
- Lack of focus is usually where I see the biggest problems with businesses. They try to be everything to everyone.
Regarding the timing: we are at an interesting time for startups and all companies with what is happening in the markets. What advice would you give to startups trying to navigate a volatile situation, or even a recession?
- Warren Buffett’s quote applies: “It’s not until the tide goes out that you find out who’s been swimming naked.”
- For private companies, save your money and make sure you have the right unit economy.
- Many companies that have benefited from growth multiples in their valuations are going to get hammered. And the next round of funding will really depend on the actual growth of their business.
- Private markets will start to close, valuations will start to fall, and very large companies will emerge.
- But the companies that are run in a really sloppy way, and there are plenty of them, are going to suffer, and we’re already starting to see layoffs.
Could this be the right time to start a business? The old adage says that a recession is often a good time for this.
- Absolutely. There are tons of examples of great companies that were created during a recession.
- As well. From an asset class perspective, now is probably a good time to invest in startups, if you’re an investor, because there’s a long holding period on these investments, seven to 10 years.
- Now you’ll have litter picks, you’ll have falling valuations, you’ll have more professional valuations of these companies, and there will be better companies overall to invest in.
Any advice for companies studying markets and considering pivoting or expanding into adjacent markets?
- Do it once, do it thoughtfully, be decisive. (Learning from Hulett’s own experience pivoting a startup three times, from WidgetBucks to Mpire to AdXpose.)
- Be quantitative and logical, and your investors will be more likely to follow you.
- Too many companies keep trying new ideas and think they can go on and on. They don’t step back and think seriously about capital needs, where they go and how fast they can grow.
One thing that stands out from the book is the difficulty dance startups sometimes have with industry giants. Lessons from RealNetworks “pushing the bear” in streaming media competition with Microsoft?
- There was no wrongdoing or legal issues, there was nothing fundamentally illegal about what RealNetworks did in its license agreement with Microsoft, as detailed in the book.
- But there were definitely elements in the deal that upset Microsoft, and it was all-out war.
- A key question is to what extent has this war prevented RealNetworks from implementing its vision?
Thinking about the possibility of RealNetworks founder Rob Glaser taking the company private?
- I don’t think there is anyone as smart as Rob, both technically and in terms of marketing. Rob’s ability to source talent is unmatched. I don’t think he gets the credit he deserves for putting this company on the map.
- If you’re not growing anywhere and struggling in a lot of different verticals, those are big warning signs.
- Focus is the key. If you’re not growing in a core market you really want to grow in, you either have to decide to double down and invest in that one, or divest from it, but you can’t make multiple versions of it.
- Often it is difficult to fight these battles as a public company. You can do a lot of things in private markets that you can’t do as a public company.
- Going back to the earlier question about the downturn, we’re going to see private equity come back and start fixing some of these companies that are hammered on the growth side.
A surprise in the book was how much you think about the competition. How should a young entrepreneur or a startup think about the competition?
- I hate when people say I don’t focus on competition. Everybody lies. I think it’s fun to have competition. You are better when you have competition.
- I always start with, who is the customer? And what is their pain? Choose your bowling pin. When you enter a market, you knock down the first pin, then the others.
- You only start to understand these things when you understand the movements of your competitors. Understand their business model, understand how much capital they need to deploy.
- You can find places around it, especially when you feel overwhelmed. Sometimes the person with 10,000 features can be defeated with just one feature.
- Spend as much time understanding your competitors as working on your strategic plan.
You like graphic novels and superheroes. Revisiting one of our questions for GeekWire Awards finalists on last week’s show: Which superhero best describes your philosophy as an entrepreneur?
- It’s Batman. for a variety of different reasons. I find him to be a very endearing character. I have a full Batman uniform to the right of my screen, so no one can see it. I watch it all the time for inspiration.
- One of the reasons is its dark side, because I feel like there’s a tragic piece that I associate myself with for some reason, but it’s also that it’s super rambling and super enterprising. He always has something in his utility belt.
- He uses his wits to fight crime, prevailing in situations in which he is otherwise overpowered.
Unlock: 5 Questions to Unleash the Hidden Power of Your Business, published by Page Two Books, is available on Amazon or wherever books are sold.
Podcast hosted by Todd Bishop and John Cook. Edited by Curt Milton. Theme music by Daniel LK Caldwell.