A tale of two startups

Last month, my startup of 4.5 years, Circle of Moms, was acquired by Sugar. I’m proud of what my team created over that time: the product behind a large and strong community of moms, a set of technologies that allowed us to move quickly and make sound data-driven decisions, and a positive team culture conducive to both good work and employee happiness.

A month out, I’ve had a little bit of time to reflect, and the lessons I’ve learned from the process are still fresh in my mind. By almost any measure, Circle of Moms was a success, but not a “rocket ship”, either of the quick (YouTube) or slow (Facebook) variety. We did lots of good things and lots of bad things along the way, and this is a great time to write about a few of them.

I’m going to recount a few pieces of my experience as honestly as possible, trying not to pretend that we were more clever than we actually were. Circle of Moms has usually been an environment where people are comfortable owning up to mistakes and weaknesses; hopefully I can maintain that spirit and provide some interesting lessons in the process.

What is a Pivot?

A year ago, I wrote about why I was building technology for moms. I outlined the thought process we went through in 2008 when we transitioned from “Google+ Circles for Facebook” to “LinkedIn for moms”.

Our story is occasionally highlighted in entrepreneurship classes as an example of a successful pivot. The term “pivot” has become something of a cliche, but unlike many business cliches it has real meaning. The outline for the pivot story is often abbreviated to:

• Team has an idea they think is brilliant.
• They build it out, and find out it wasn’t brilliant.
• Team realizes that some byproduct of what they built was in fact brilliant. Byproduct = pivot opportunity!
• They pivot the company in this new direction and immediately achieve success, fame, and fortune.

Does that story apply to what actually happened at Circle of Moms? Yes and no.

• Original idea not being brilliant? Yep.
• Byproduct = pivot opportunity? Yep.
• Immediate success, fame, and fortune? Not so much: the pivot is only the beginning of the story.

The Pivoters

In 2008, when we decided to shift our company’s focus to moms, my co-founder Ephraim and I were guided by both personal goals and a business opportunity. On the personal side, we wanted to create a substantial website that would truly improve the world. I admire Zynga’s data-driven approach and relentless execution, but I wouldn’t derive a lot of satisfaction from building up a casual gaming property.

On the business side, four things were pushing us forward:

1) We were confident we could quickly drive distribution among moms. We’d been very successful with viral growth as Circle of Friends, and Circle of Friends’ viral mechanism had been far more effective among moms than anywhere else.

2) Moms were frustrated with the online products available to them. No good ways to meet other moms, poor information available online, difficulty storing and sharing their kids’ special moments, and decade-old tools to communicate with others like them.

3) Advertisers were willing to pay to reach moms. That meant that with moderate scale, we could get to profitability.

4) Moms told us they’d pay for tools and features that make their lives better and simpler. The now quaint-sounding quip I made in 2008 was that our customers weren’t 15-year-olds who had nothing better to buy than fancy ringtones.

In short, four positive indicators: a distribution mechanism (something all too many startups overlook), a high-level consumer need, and two possibilities for monetization.

Great, right? Well, yes — but there was one key constraint. Let me explain by making a comparison.

The Visionary

When I joined Reid Hoffman’s team at LinkedIn in early 2004, LinkedIn had 250,000 users and similar dynamics on items 1-4: a promising if not fully built out viral mechanism, a strong set of needs from a valuable audience, and a couple of potential revenue drivers. But in Reid, LinkedIn also had one unfair advantage.

Before LinkedIn even existed, Reid forcefully described a changing world in which everyone needed a place to hang their professional shingle. His vision of the future professional world was fluid and efficient on one hand, and relationship-driven on the other. This stood in sharp contrast to both the slow-moving, stay-at-a-company-all-your-life world of the 1960s, 1970s, and 1980s, and the transactional career-oriented sites that grew up in the 1990s. And this vision was truly a manifestation of his life: Reid cares deeply both about making the professional world more efficient, and about fostering relationships that can help all parties involved.

Very few founders have the ability to forecast where the world is going and then mix in their startup’s product. Reid’s correct vision of how LinkedIn could succeed — albeit with tactical shifts along the way — allowed the company to make big smart bets and helped its prospects immensely. The execution at LinkedIn was fine but not exceptional; many tactical choices were sub-optimal; the team was solid but not as the level of PayPal’s early team. But the combination of clarity of purpose, a good distribution model, and an ultimately correct view of the world allowed LinkedIn to overcome a number of challenges and become an influential and highly valued company.

The Two Climbers

Imagine two climbers. The first is a mountaineer. He knows he wants to climb Everest — it’s the most famous mountain in the world. He identifies the best people to help him, maps out the route, understands the challenge. When he actually goes to climb it, he encounters a blizzard and one of his colleagues gets sick — so he has to adjust his strategy. But he knows where he’s going and has a good understanding of how to get there.

Then picture a second climber. His goal is to get up as high as possible. He finds himself in San Francisco, on a foggy day. He knows from Wikipedia that Mt. Davidson is the city’s highest point. He can’t see more than a few feet ahead, but he can tell the difference between up and down, and sets off to cleverly find a way to the top.

Now map these types to two entrepreneurs starting companies. At Circle of Moms, I was the guy wading through the fog (and no, I didn’t have Google Maps on my phone). That wasn’t necessarily by choice: I’d spent several years working for a visionary founder, and would have emulated him had that been realistic.

Though you might not know it from reading popular accounts of startup stories, my non-visionary status wasn’t unusual: a pivoting company almost always starts out in the “fighting through the fog” mode. Circle of Moms was an extreme pivot case, a business largely chanced into by two men without kids. As such, we were unlikely to ever be blessed with an intuitive vision like Reid’s to guide our team. What were the biggest challenges our users were facing, and how was our company uniquely positioned to combine our resources and the technologies du jour to solve them? Those were questions Reid was able to answer instinctively and intuitively about LinkedIn; I found I really had to work to make progress on them for Circle of Moms.

Not having that intuition makes it harder to get one’s hands around a sense of purpose; I don’t think I ever perfected my elevator pitch. It was a challenge to find something like “the place to hang your professional shingle” (LinkedIn), “holding the Internet in your hands” (iPad), or even the smart journal that helps you share life with the ones you love (Path).

Embracing the Pivot Style

We ultimately settled on “motherhood, shared and simplified” as a tagline for Circle of Moms. It’s pithy, but not descriptive: better as part of the logo on a website than as a hook to convince potential recruits to join a team.

Lest you worry that I spent those 4.5 years crying myself to sleep, I’ll assert that tagline clarity rarely makes or breaks a company. But that communication challenge is representative of an area where we weren’t as strong. Like LinkedIn, we did what we could to capitalize on our strengths. In our case, that meant doubling down on execution and making the best of the resources we had.

Data-driven pivoting was certainly one strength of ours, and we were constantly making small shifts. We may not have found the most massive mountain, but we maneuvered the hills around us adeptly. We got features out quickly and then focused on optimizing them. We did well on SEO, figured out what worked on social media, crafted good viral flows, and had success creating and customizing content for email. Early on, we had an ad sales partner who helped us to become an attractive destination for brand advertisers. With revenue from those ad campaigns, we managed to grow the team steadily, while never wasting large amounts of money in unnecessary ways.

We had more trouble in areas like reinventing our home page, coming up with crazy new products, or pulling disparate features into a single experience. And press was probably never our strength.

Keys to Success

All else being equal, I’d rather be a visionary than a pivoter. For Circle of Moms, success happened because we found a good tack and paid attention to our constraints. I never had the vision for Circle of Moms that Reid had for LinkedIn. Yet our team managed to survive and prosper, because of a few key things we did well:

1) Turning the size of our user base into an advantage. Early on, many moms signed up for Circle of Moms, but didn’t do much on our site. In 2011, we built out technology to scientifically test out and optimize many different types of email content. That technology, coupled with a strong team writing new content, allowed us to reinvigorate our base of six million moms. Without that large user base, we never would have been able to find and optimize the best posts.

2) Hedging against Facebook-related risks. When Circle of Moms launched, we were almost 100% dependent on Facebook for traffic; in 2009 many VCs considered that an unacceptable risk and weren’t interested in funding us. That changed so much that 2-3 years down the line, during acquisition conversations with Sugar, I don’t remember the subject of Facebook traffic ever being brought up.

3) Moving away from several ineffective products. Between 2008 and 2012, we had four distinct primary product focus areas: communities of moms with similar interests, Child Page to chronicle each child’s development, local moms’ groups, and blog-style content. I wish we’d found the perfect feature; short of that, the discipline to pull away from things that weren’t working was the next best thing. And our mini-pivots ultimately allowed us to find a path to grow usage 2.5x in our last 14 months as a standalone company.

I’ll be writing future posts on each of those three topics.

Looking back, I’m glad to have both learned and accomplished a lot. Over those 4.5 years, we built a strong team and a community of millions of moms. We succeeded more than we failed. And I left the company in strong hands — Sugar’s and Ephraim’s — when I departed last month. Sugar’s team brings a number of new skills to the table, and I look forward to seeing how the combined companies will address some of the challenges we struggled with on our own.

Thanks to Elaine, Mark, Matt, Ephraim, and Tom for feedback on early drafts of this article