My Two Year Old is Smarter Than You

Because he is continually, persistently, (aggravatingly) asking “why.

And that is vital in a world mostly focused on the what.

One of the things I’ve noticed in many of the decks I see, entrepreneurs I speak to, even decisions I’ve personally been making is a disproportionate focus on the what of a business or market. How many customers does a company have? How much do they spend? How frequently are they purchasing? How much do they spend? How many times do they open an app? What is their workflow within the app? Which color drives conversions better? Those are all questions that answer the what. And they don’t tell you a darn thing about the why.

I don’t know how this defaulting to questions defined by what started. I joined my first startup in 2007 and it sure feels like we thought about why all the time. Part of me wonders if it has to do with the surge in A/B testing and “Growth hacking.” Both are important functions of a startup, and can answer a lot of questions about what is working better – which design, what affiliate channels, etc. But again, they mostly ignore the why.

Phin Barnes from First Round Capital has a very nice piece – Growth is Not a Hack – so can we please stop saying Growth Hacker – where he demands of a business to understand the why:

It’s tempting to just throw stuff at the wall and see what delivers the most users. Don’t fall into this trap. Hacks can lead to empty-calorie, engineered distribution that isn’t sustainable…At the First Round Community companies I work for, growth is a strategy based on observation of the market and understanding of the consumer. The most successful companies have frameworks and data to understand their users, engagement and acquisition. They can explain why growth is happening, see the business impact, and accelerate growth based on what they learn.

The truth is we’re all guilty of defaulting to the what: I’m guilty of this too. Last week I published a well read post on eSports that stated a lot of bullish facts about the eSports industry, its insane growth, engagement, etc. But I offered very few insights into the why. The why is the toughest question to answer, because in a world dominated by (or one where we ceaselessly laud) engineers and data analysts, it is often unquantifiable.

But the why is also often the most exciting question we ever ask: breakout writers Malcolm Gladwell, Steven Levitt, Jonah Berger and others have made a career out of taking the “what” we see around us in the world and explaining why it is so.

In a world where storytelling is becoming a determining factor of success, understanding why your market or customers are acting/reacting the way they are is crucial. As Bill Gurley recently noted, the importance of narrative is paramount. But it’s hard to build an exhilarating narrative on facts alone. I once asked one of my professors (and current Groupon CEO) Eric Lefkofsky how he knew he wanted to make an investment. He answered that if, while discussing a business with its founders, the case they were making was so compelling that he simply needed to jump out of his chair with excitement, that was the tipping point. Growth can pique interest, but only a exhaustive conceptual understanding of why can truly close the loop about a narrative.

Maybe it’s a bit didactic  of me, but I have been underwhelmed by the number of founders with a deep understanding – or even an infectious curiosity – for the why of their business. When I reflect back on the entrepreneurs I’ve been most excited to work with, it’s those special leaders who have a methodical understanding of why now, why this market, why this strategy, why this team, why we win, why this is working.

I can’t help but wonder if in a marketplace dominated by software intended to answer only questions of what (most BI dashboards, big data, etc) there is a massive opportunity for platforms that can begin to synthesize the why. On the enterprise side, it feels like we’ve gone from data aggregation towards predictive and actionable analytics. That shift has been accepted because those actions produce results – yet it leaves us dependent on variables we fundamentally don’t understand. I hope this changes. From what I’ve seen, Directors or VPs of Customer Insights typically don’t get hired until a startup exceeds 100+ people…I would challenge that habit and I wonder how much faster product/market fit could be discovered if the current growth versus understanding model were inverted.

About the author

Ezra Galston
Ezra Galston

Consumer focused hustling @Chicago Ventures, Young Entrepreneur @Foundation Capital, Class 18 @Kauffman Fellow, and Chicago Booth MBA. Former professional poker player, with 4 years experience doing marketing/biz dev in the online gaming industry. Launched a "poker hedge fund" in 2011, a record label in College, and produced a festival screened short film in 2006.

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