Sunday, September 27, 2015

The Implied Assumption of Success

One of the mental traps that I try to avoid is what I'm going to term "the implied assumption of success."

This trap occurs when entrepreneurs say something like, "If I raise $2 million instead of $500K, I'll be able to get much farther, so I should raise $2 million."

The issue, of course, is that the implied assumption of success glosses over the fact that your chances of raising $2 million are probably very different than your chances of raising $500K.

I was struck by another version of this when I read the seemingly contradictory facts that mobile browsing traffic was 2X that of native apps, and that native apps accounted for 80-90% of our time on mobile devices.

The punchline is that both are correct.  Far more people visit mobile websites than use mobile apps, but people spend far more time on the few mobile apps that they bother to use.
"Deepest engagement for the longest period of time happens in apps, so apps matter, and they matter desperately for brands who want to connect to customers. But since, as we’ve seen in our research, apps-per-smartphone users is maxxing out at an average of 50-60, and no-one besides Robert Scoble is going to install an app for each company, service, or site he or she interacts with, your mobile web experience has to be good, and it has to be strong."
In other words, a person who downloads and regularly uses your app is way more valuable than someone who just visits your mobile website.  But this doesn't mean you should invest all your efforts in your mobile app.  Indeed, consider the plight of major retailers--of the top 30 US retailers, only 2 of them drove more than 50% of their mobile usage via app: Amazon and Walmart.

The implied assumption of success tricks us into investing in desirable, but lower-probability initiative.  When you are considering several alternatives, make sure that you account for the probability of success, not just the magnitude of potential benefit.



2 comments:

Unknown said...

Chris, Consider that it might be easier to raise $2,000,000 because $500,000 falls in the dead zone between sums that constitute angel and venture investment. The Irony is that one is actually more likely to succeed in raising $2M than $500k.

As such, you ought to also consider the "implied assumption of failure."

Regards,

Kenneth Stein

Unknown said...

Chris, Consider that it might be easier to raise $2,000,000 because $500,000 falls in the dead zone between sums that constitute angel and venture investment. The Irony is that one is actually more likely to succeed in raising $2M than $500k.

As such, you ought to also consider the "implied assumption of failure."

Regards,

Kenneth Stein