Thor Ernstsson, Founder of Alpha and Strata
Meet Thor Ernstsson.
The founder of global giants such as Alpha, Strata, and lead architect for Zygna responsible for Farmville, Ernstsson knows business and products.
In this interview, Nathan sits down with Ernstsson to discuss his journey from Zynga game developer, to creating a company that serves half of the Fortune 500. Honest and candid, Ernstsson reveals his decision-making processes behind some of the company’s largest pivots, changes, and challenges.
While most people would shy away from the idea of launching a business during a global crisis, Ernstsson is perhaps living proof that not only is it a good decision, it’s the best business decision one can make.
- Thor Ernstsson discusses how he first began working at Zygna, and how he felt about the global success of Farmville
- His next business ventures, including Alpha and Strata
- Why he decided to pivot the company
- The importance of “now”, and why starting a business during a crisis is a good idea
- The decision to launch a business that aimed to connect people, while it was the start of the pandemic
- How to change the world, and why you should always aim to solve a problem that won’t change
- The importance of customers and why they need to be invested in your business’ success
Full Transcript of Podcast with Thor Ernstsson
Nathan: Thor, thank you so much for taking the time.
Thor: Great to be here. Good to see you.
Nathan: One of the first questions that I ask everyone that comes on is, how did you get your job?
Thor: My job, or my first job?
Nathan: How’d you find yourself doing the work you’re doing today?
Thor: Perfect. Kind of the same answer either way. So when I first came to America, I’m originally from Iceland, born and raised on the northern coast in a little fishing village of about 500 people. And moved to America not knowing where to go or what to do, I didn’t like that. So I wound up in a little military defence contracting town in Alabama, called Huntsville. And the only job there was really defence contracting, which required citizenship, because it required security clearance. So, couldn’t really do any “normal job.”
So instead, I wound up trying to solve other people’s problems. I wound up doing a lot of consulting, a lot of startup work, a lot of technical work. And really trying to understand, if somebody comes to me with a pain point of, I have this magical solution, if only the world knew, and realising very quickly that none of the problems were technical, and they were all just sort of people related one way or another around product market fit, around users, around understanding the pain point in a deep enough way.
That was 20 years ago. Since then I’ve spent my career trying to understand those kinds of problems, trying to then come up with products, see if there’s a product market fit, and then build companies around it.
Nathan: Love it. Now, I know you’ve spent some time at Zynga as lead architect of FarmVille, which is one of the most played games of all time. They went from like 200 to 2000 employees in one year.
Thor: There’s a lot of really interesting stories that came out of that. So I worked on FrontierVille primarily, and I worked with the FarmVille team and others as well too. But the main thing there that’s fascinating is that a good way to characterising as an analytics company was sort of a gaming wrapper. So, what we did was, went really deep on analytics, really deep on product management, what we call today product management. And figured out how to give people what they wanted. We’d measure everything, every click, every modal, every pop up, every interaction. And then we would understand what do people interact with, what do they appreciate, what do they not. What drives engagement, what doesn’t? And then fold that in across entire portfolio of games. And it worked amazingly well.
And then afterwards, see if that would apply to other domains in other areas. So the lessons I learned there were really transformative in the way that it changed how I thought from thinking about solving problems to thinking about solving problems at scale.
Nathan: That’s interesting. So, what happened next when you moved on from Zynga?
Thor: Started a health care company called Rally Health. And there’s a handful of people that were working on. So it was four of us in the beginning. And really, it was the same kind of value prop of how do you get people to connect and drive engagement, except instead of tending to a virtual farm and buying more virtual fertiliser, it was about engaging with their health. And how do you get people to basically care more about their health and then, over time, be healthier? And that worked really well. The concept and what we built the engine for it is still market leading, currently owned by UnitedHealthcare. And I don’t know how many billions of dollars of revenue flowed through it. But a few years ago, crossed the $1 billion year mark.
Nathan: Yeah, wow. And that was acquired?
Thor: Mm-hmm (affirmative).
Nathan: When was that?
Thor: So a bit of a convoluted process, but 2016 I’d say was when it was acquired.
Nathan: Wow. And then what happened next?
Thor: So then, I started a company back in, around that time [inaudible 00:08:28] actually called Alpha, where what we would see over and over would be people that had an idea, and they thought it was great, but they couldn’t show that idea to anybody. They couldn’t give anybody access to their product, they couldn’t get people to care for various reasons. So, they would get money from investors, they would build an entire company, and then only when the idea launches, when the product launches, they see that it was just fatally flawed in some way.
And what we saw is, that’s the life of a startup founder, we’re all familiar with that, we all understand the customer development journey. And what we saw was when you take that and you plop it over into corporate world, you don’t have the same customer development mindset. You don’t have the same experimentation and the same focus on learning. So instead, you just put more resources against it. So, product after product comes out with hundreds of millions of dollars in some cases. And if one person had seen it beforehand, one person would have said, that’s idiotic. One user with nothing to lose, as opposed to sort of corporate executives and bureaucrats that are trying to just get to the next stage of whatever they’re doing.
And then we realised that there’s a lot of early adopter types that understand customer development that are inside of these organisations. So we built a product to sort of empower them, built the insights platform to be able to run these kinds of experiments at scale. So we have 110 million users, you can test any idea or concept or prototype or competitor’s product against, and really build a feedback loop with your audience, a feedback loop with your target customers, wherever they might be. And it worked phenomenally well. We have almost half the Fortune 100 as clients. Really saturated in certain legacy industries that are all going through change right now, especially because of COVID.
Nathan: Yeah, wow, that’s really impressive. I thought lean startup movement was really pioneering. And less and less people thinking this way that you described around kind of build first, then ship, and not looking iterating or …..
Thor: That’s what you’d think, that’s what you’d think. As soon as you go to an office and you realise what you need to get the product in the market, how many lawyers will tell you no, how many accountants and actuaries will have problems with whatever you’re doing for whatever reason. So it’ll change some model or some formula. And you’d be surprised by how many of these sort of …… people will run consumer-facing digital products in finance, in health care, in retail, you name it. Most industries in America are actually done with risk in mind as opposed to customer value. And building a product and scaling it and getting to any kind of meaningful level for a Fortune 500 company it’s a big hurdle. And having data within the organisation to arm the people that are trying to show no, this is actually good for the customer because this is what they want, is invaluable.
So, that’s really the problem we set out to solve was how do we empower those people within the organisation that have taken all the training, have gone through all the lean workshops, they’ve gone through all agile, everything, and thy know all the buzzwords. Like they’re teaching us buzzwords because they’re just trying to get the message out in organisation. You’d think that it has already changed but it really takes a long time to transform how people work and how people sort of relate to one another.
Nathan: Interesting. You’re still working on Alpha, and then you recently launched Strata, right?
Thor: So I’m still involved as a board member, and I was the founder in Alpha. But we transitioned over to new leadership the end of last year. And it’s going really well, both as company but also as a team. It’s really exciting to see something that you’ve built take the next step into maturity, if you will. I have a teenage son and it’s like a similar process. It’s pretty interesting to have parallels between building something and then obviously, raising a human being to see what happens next is what I’m super excited for.
And then we spent a few months travelling, and then earlier this year set out to launch a company really focused on that connective tissue that I mentioned. How do people form relationships and build meaningful relationships? And it turns out to be something a handful of people can do really well. And the way they do it is very similar. You go back hundreds of years, actually, and you have the same kind of mental heuristics that help somebody know when to reach out, why to reach out, what to say. And they’re not that complicated. And yet, you have all these tools, CRM tools, LinkedIn, Salesforce, things like that, that will do some part of it. But it doesn’t actually help with the action. It doesn’t actually help with you reaching out. It’ll help you track, it’ll help your manager stay on top of what you’re doing, it’ll help give you dashboards, it’ll help give you all of that stuff.
But really, as the individual who’s trying to just be a good person for your community or for your network, all you need is reach out to Nathan, because of this thing that happened a few weeks ago, and just check in and see how it’s going. And it doesn’t have to be anything more complex than more.
So, we understood the problem reasonably well but it was a hypothesis at the time. And we thought that live events was going to be where people really are meeting so much. And you have so many friends and people you know from a live event circuit. I have friends that live in New York but I only see in Europe in California. I have literally never seen them in New York. We only launched the second week of March. Turns out live events were not really going to be a thing.
So, it was a really interesting process to launch a company into a space that then had a pandemic completely squashed all of our plans. But the underlying Problem is still there. The underlying concept is still actually more relevant than ever because now you have to be so intentional, you don’t have the serendipity of just running into people. You don’t have the luxury of not doing anything because you’re locked in your apartment or in your house, and you will not see anyone other than your family ever.
So, when you want to stay in touch with these people that are not necessarily in a transactional sales-oriented way, all that’s going to go into our CRM. And they’re not your closest friends either because you’re going to text with them, you’re going to talk to them, you’re going to see them, you’re going to make an effort to do that. It’s really the other few 100 people in your life that are instrumental in driving business and driving introductions and driving anything you need to do professionally as an individual, whether you’re in really any executive role, whether you’re a founder, or you’re an investor. All of those profiles have the same type of benefit from their network.
And to be able to activate them and engage people, I can’t tell you how many customer development interviews we’ve done, where everybody has the same kind of process and same kind of system, I’ll show you what what it is, all is some version of this, where it’s just a list of names or task lists or something like that. And on a piece of paper, on a spreadsheet, you cross them out, and you move on. And hopefully, you’ll get back to it, hopefully, you’ll remember what you did. But in reality, we all are embarrassed by often we drop the ball. So, what we’re doing is building a toolkit to really help with those kinds of things.
Nathan: Interesting. So, you launched basically second week of March, pandemic, that’s when every company took a hit, every company took a hit. Didn’t matter where you were, except if you’re in essential services, you took a hit. SaaS, eComm, everything, right?
Nathan: So, you launched as a company that helped with live events?
Thor: Helped people connect and live events was going to be our go to market business development angle, because it’s the, the single simple way to frame it was you go to this event, you walk out with a stack of business cards, and then what? You want to stay in touch with these people but you can’t. And it doesn’t matter how senior you are, it doesn’t matter how big of a team you have, that helps you do those things, there’s still just too much friction on the process. And yeah, it turned out to be a pretty tricky go to market.
Nathan: Yeah, I see. So, what can people learn from what you’re doing now with the company post-pandemic, because a lot of people watching this, they’ve either been affected with their existing startup or company due to COVID. It’s changed. The landscape is different. And what can people do when it comes to launching a successful company because you’ve obviously pivoted. Are you doing well now?
Thor: Yeah, because the problem is more prevalent than ever. You have to be intentional in who you reach out to because human connection matters. A couple of things I would say that are just good heuristics, that I’ve found to be good heuristics, and just really helpful advice. One of them is that you never know how you’re going to get somewhere. You can have a two year plan, a three year plan, a five year plan, but it really doesn’t matter. All you can really know is where you’re trying to go. And hopefully, your first step in that direction.
Once you capture those things, you have an aspirational vision [inaudible 00:19:10] ultimate goal that aligns all your effort, all your experimentation, all your product development, all the stuff. You know where you’re going, you know what you need to do today. In the beginning, if you just have those two things and nothing else, you’re off to a great start. Even if you’re the CEO of a Fortune 100 company, the same lesson holds true. And I’ve talked to so many, so many both founders as well as executives, senior executives, huge company. And really all they have is alignment and vision. And then they have, six months from now, they have no idea what things are going to be like, because nobody does.
So, the faster you can throw out all those intermediary documents and artefacts that you’re tied to, because they’re just not true, they’re based on so many false assumptions. COVID certainly shines a light on all that right. Any plan that was made in December, is useless. So if you’re making decisions based on data from 2019, this doesn’t matter. So that’s number one. And number two is really understanding what you’re doing as a founder, you’re not proving necessarily that you’re right. You don’t have a product plan that you need to execute because you have all the answers. It’s actually the other way around, you have a bunch of questions.
So if you frame everything as a hypothesis and your goal becomes to learn. And the way you learn is through experimentation. So all of a sudden, now it’s not let me launch a podcast because I know the world needs it. It’s like, maybe it does, maybe it doesn’t, how do we find out. And it just creates a different environment where now as a founder or an executive, when you create the right environment, so you have a culture of learning and experimentation, as opposed to just mindlessly step A, step B, step C, those two things are instrumental in navigating something like COVID, because you walk into a meeting today, no one has any answers, period, full stop. Somebody will tell you that everything is going to clear up in two weeks, some people will say two years.
The craziest number I’ve heard so far is that, there’s one company in particular that is not planning on operating until, starting again until 2024. So they are on hold. And it’s a big cultural institution that basically everybody knows. Their lead times and their cycles and everything, their executive team has been told 2024 is when they start again. So, who knows? Maybe that’s true, maybe it’s not in terms of how things play out.
But if you look at it from a learner’s mindset, and you say, all right, so what are the things we’re trying to do? What are the things we’re trying to figure out and how do we figure them out? Along the way, you will learn enough and you will build enough and you will do enough to hopefully discover I guess, a viable business. But you have to do the first step first, which is understanding alignment, so that everybody is experimenting and sort of wandering aimlessly, but in the right direction.
Nathan: So, can you talk us through that process around kind of what you did to, and I hate the word because everyone says it, pivot with Strata and have that mindset? You probably had capital, so you had maybe less risk because you didn’t raise anything, or using own funds or?
Thor: Yeah, so self-funded at the beginning, even to a degree still. We raised a little bit of money. And that process by itself was a huge learning experience, because we were talking to investors, the start of the conversations was always that they had just lost, all their LPs, and even then personally in a big way had lost a third of their network overnight when the market crashed in the beginning. Eventually recovered, but again, nobody would know that. We had funds tell us that their LPs told them, and these are again, big A list funds, in some cases, that it’s okay if they slow down on investments because of all the uncertainty.
So, going through those conversations in that process, I’m pretty sure that you could have still put together a decent round and focused on that. But instead, we focused on product development, and really understanding where we’re going to go to market and how we’re going to do it, because that obviously was thrown out the window as well.
So, we focused our efforts on two things. On what is the actual ultimate platform need to be, and how do we get there, and from a personal standpoint, how do we build the right team to execute on that? And then in the short term, the team that was already together, sort of my co-founders, what can they do now that helps us in that direction? And what we came to was helping drive connectivity and virtual events. So if you’re at the 85th Zoom webinar of the day, what does being there actually mean? How do you connect with a speaker or a sponsor or another person in the audience? How do you create certain connective tissue around those kinds of interactions?
And we built a bunch of tools. We built some actually really good tools to help drive that exchange and drive those interactions so that the speaker would have a virtual inbox basically for that event, and they can choose to accept or ignore each one, and you can just go through that much, much easier than giving your email to the whole world, which certain people are reluctant to do. Not really in our community because founders and investors and such will talk to anybody. But generally, if you’re especially a corporate executive, or sort of an author, you have a pipeline. So you might have somebody else managing it for you.
Built it out and we’ve dealt now with the majority of the big events companies, and they’re all scrambling to go virtual. And they’re all scrambling to figure out how do you rebuild the revenue stream online. And we were just a small part of that, and helping them out with that. So we have a bunch of partnerships there and a bunch of users that have gone through the platform for just that part, just like the initial conversation. And I’d say it was successful as a learning experience. It was certainly not successful, at least not yet, from a user acquisition standpoint. It was really our goal.
So how do you convert people from that into users of the main platform? And the amount of control that certain people, most of the corporate side, and that process want to have, is insane. You might have speakers that will say to the organiser, they’re not comfortable even with the safeguard in place, having people able to contact them in case of liability from their employer, which is insane. They’re obviously not a liability. If somebody sends you an unsolicited email, you’re not at fault.
So, there’s just all these human things that come into the mix where we have a technical solution, but because we’re not married to it, we could see that that technical solution doesn’t necessarily get us to where we need to go in as effective or efficient way as maybe something else. So we’re still doing it, we still have a product in the market called Nudge for that. But then we launched something just last week, actually and a closed beta that’s going really well as well, that is now focused on just helping you as an individual manage your own communication. So, forget the virtual event stuff, forget those ties. It’s really just you as an individual. You’re trying to be more thoughtful, more mindful. Who should you reach out to this week? Here’s three people. Go now and do more, do more, do more.
Nathan: And it connects to Gmail or something?
Thor: Exactly. Gmail or Outlook or Exchange.
Nathan: Yup. Got you. Interesting. So, you’re obviously a very, very strong product guy. No doubt about it. And you’re obviously really passionate about product development. For anyone that wants to start a business right now with, like you said, it’s hard to plan, it’s fun to think ahead, it’s fun to think if we can do this, then we do this, and it can turn into this whole big grandiose thing. What can people be doing right now?
Thor: It’s a great question, and I would go back to the first thing I said, which was put a stake in the ground, and make it big. 20 years out, the world’s a different place because I did this. And when you have that time horizon in mind, it doesn’t matter if it starts during COVID or not. So, thinking through problems that won’t change. So, 20 years from now, what do people still want. Because solving a smaller problem will eventually, that kind of stuff goes away. So if you think about, so here’s a car, I’m going to build a better tool to tune my engine. 20 years from now, that engine will be totally different. There’s all kinds of things that are shifting. But transportation will not be different. People will still need to go from point A to point B. Even with Zoom, even with video conferencing, even with 3D avatars and virtual reality, there still will be a human need to go from point A to point B.
So if you think about that and the underlying human aspect of it, for these problems that are not going to go away. So instead of looking at all right, so during COVID, the question isn’t what is changing. The question is, what is not changing. So what are the things that people still need to do? They still need to connect with other people. They still need to be mindful and be a part of our network, be a part of a community, be a part of society in a way. So those are the kinds of problems we’re solving at Strata. We’re still going to need jobs, for example, but now the jobs are global. So thinking about a local job market all of a sudden doesn’t make a whole lot of sense, where most of our team is in New York, or close to New York, now really could be anywhere.
So, thinking through the problems that are not going anywhere say for the next 20 years. And then saying, all right, well, here’s how I’m going to impact that. And by really being clear about what that is, it helps you recruit the first few people. It helps you raise money, it helps you clarify your pitch. And then another thing there is, when you tell somebody your pitch, having them repeat it to you or having them repeat it to somebody else with you not in the room, to see if it’s even clear what you’re talking about.
And if it’s not, you keep iterating until you get to a point that you as a founder now have an idea, as an aspirational founder, you have an idea that you’re passionate enough about, which is important, because you’re going to sell first, pretty shitty process, especially the first time around. You have to get used to hearing a lot of nose, and that’s just how it is. That’s okay because that is the job you’re signing up for. What people read about is not the job. That is a most likely never going to happen kind of success case. Even in the other success cases, it’s still not that glamorous.
So, you have to be prepared for all those things, and if you can do that up front, and you can get other people excited about what you’re doing, get other people on board, get other people see your vision. At that point, you have some momentum, and you can build on that momentum. And then you have others that are trying to help you. Because so many times I’ve seen three or four people that get together and they start a business because they have a business plan. And then a year or two down the road when it’s kind of working out, they realise that they’re actually building three or four totally different businesses. And they were never really on the same page.
Nathan: I’d love to hear kind of from the technical side as well on building a great product. I loved your take on the mindset and I’d love your take around kind of thinking about the problem, but from a technical standpoint, or even where do people start? You’ve got that mindset, you’ve got that learning mindset. I get it. What I want to do, I know the problem I want to solve, I know what problem I think I can solve with. In 20 years from now, I want to put a huge stake in the ground saying that I helped change shape the world dramatically over a 20 year period and I’ve build something of true worth and significance. Where do you start? What do you do?
Thor: Yeah, that’s a great question. And it really goes back to the learner’s mindset. If you’re trying to figure out how do you learn, what happens is you shift out of the mode of technical execution to then saying, all right, so what do we need to build to prove this out? And this is where one of the most bastardised concepts associated with the Lean Startup movement is MVP, minimum viable product? Because most people look at it as is what is the shittiest cheapest thing we can build to maybe do something that’s somehow related to what the actual product will do? But really it’s like, what is the thing we can launch to learn something? So the first thing, for example, the consumer product, have people sign up. And if you can’t get them to sign up, you can’t get them to use it. And it really is just that simple.
Nathan: ……. landing page.
Thor: Even if when they sign up, just whatever, it almost doesn’t matter. It could be an email list. How many people click on your email? When we launched Alpha, the process was, we understood, again, roughly the problem. We understood the aspirational vision very clearly, which is just quite simply on demand or even real time insights. You need something, you have it. Great, how do we commercialise that? So we know it’s for product people, we know it’s for marketers, we know it’s for strategists, we know it’s for researchers. We don’t know who it’s going to resonate with right now for these specific reasons, this is back in 2014.
So we bought a whole bunch of email list, spent 1000s and 1000s, 10s of 1000s dollars buying email lists for people with different job titles in different industries at different levels. And A/B testing the hell out of everything. Where the value prop is actually what we tested through email outreach. Our first three clients were Citibank, AT&T and Pfizer. So slightly different value props, but it resonated so strongly that they would run through their walls through their procurement office. All the people that are telling them no because they needed it so much.
We had one case with a Fortune, I don’t know, Fortune 10 company by now, where it’s in a heavily regulated industry. And the person was SVP, knew that it would take six months to review but he needed data now basically, and he knew he needed to use the product now. So we upped the limit on his corporate credit card and we have to charge him $10,000 a month on a credit card. Just because that way it wouldn’t trigger the internal flags.
So once you have signals like that, once you have people that want what you’re selling, again, I understand the question was about technology, but it really starts there, because then you build it, then you figure out what are you actually paying for, and then that’s what you build. So you have to build enough to be able to deliver the thing you’re doing, whatever it is. But you don’t have to build everything. As a matter of fact, you have to build very, very, very, very little, just enough to deliver for those earliest adopters. And then you start learning, then you start iterating, then you flesh it out. Then over time you have a whole bunch of other things. But chances are nobody is buying a product because it has feature A and B and C and D and E. They’re buying one of those. So the faster you can figure out which one they’re buying, the faster you can build it, because you only have to build one instead of five.
Nathan: So you’re really thinking and what you’re trying to do when you’re starting any business and trying to work out what that product is, you’re trying to find what is the problem that you can solve where people will bang down the doors to pay you money for it, because then the sales process just becomes so much easier.
Thor: The sales process of product development. If you have people that need your product so much that, currently, people have to go through a really gnarly authentication screen if you use Gmail to use our product. And we see it because we’ll do onboarding calls sometimes through video and they’re like, oh, okay. We see it because the messages that Google puts up are really scary. And we know they’re scary. But people need this enough to the point where they’re willing to accept it. The liability, and obviously, we’re all in this together, and we’re trying to figure this out together. And that’s really what you want. You want the customer to be a part of a team almost, the early, early, early, early customers. They are so invested in your success because you’re solving a problem that they have, that’s so acute that they’re willing to do all of that.
And then once you figure that out, you build it and you streamline it and you automate it and you build it even further. Now that’s for vast majority of products. Then there are others where there might be a technical hurdle. If you’re in biotech or drug development, or whatever, it works or it doesn’t work. It’s a science thing. If the thing doesn’t work, then forget about it. But if you’re dealing with software, if you’re dealing with ops, if you’re dealing with, those kinds of things where there’s virtually zero technical risk. You know you can build yet another website editor. You know that can be done.
What is the problem with existing ones? How do you make it better? How do you do it? What’s the one thing that you can drive people to? So that’s really the thing. What you do now is really, a starting point is do anything. But if you do these other things, you have guardrails around your exploration, you have guardrails around your development, because also another trap I’ve seen for early stage founders, especially in the 20 to 40 person team size range, where I’ve seen this a lot, is that they start feeling like they’re losing control. And if they didn’t do this up front, because you get one chance really to sell your culture. And if they want to control every decision in the organisation, that’s around the point they stop being able to do that.
And if you’re not sure what your marketing person is doing and you’re not sure what your operations person is doing, and you’re not sure what your CTO is doing, and you’re not sure it’s really aligned, you start having these awkward and very difficult off sites where everybody’s trying to orient and align and all that stuff. There’s value, obviously, in those things, but the amount of effort and friction it takes to change someone’s behaviour is exponentially greater as the organisation grows. This is applicable to any human behaviour change because they set their way in certain way.
And then for you to change it is now changing who they are as a person in a way. So, it’s almost impossible to do after the fact. When you’re the first 10 people or so, this is really when you go through these exercises. You figure out what are you all here for. Make sure you’re all on the same page, make sure we’re all going towards the same goal. Then the rest of it comes really easy because now the next 10 people the marketing person hires, the next 10 people operations person hires, the next 10 people the CTO hires, they’re all going to be aligned with the original vision as opposed to with our own visions that might create fiefdoms and other kinds of friction. So really, it’s setting your stake in the ground in an appropriate way, as easy to communicate, that makes sense to everybody before there is anything, before there’s a product, before there’s any investment made in what you’re doing. It’s really the most important part.
Nathan: I love that, that’s so important. What were you going to say, sorry?
Thor: I said it in a very absolute way, but I’m saying that is what I found to be the most helpful, and the biggest and most expensive mistake that a lot of founders and executives make.
Nathan: When we come back to that kind of learning mindset, the hypothesising, once you do, like you said, whether it’s a signup, whether it’s how you guys got people via outreach, cold outreach, and then you worked out what is the value prop, what happens next?
Thor: Obviously depends on the product, but I can talk about some specific experiments and experiences I have, where we would, for example, in a healthcare setting, you’re dealing with health insurance companies that are kind of a definition of legacy companies. They are selling a product that is government regulated and cannot change very much. They’re selling in a very specific sales cycles that are also government regulated and can’t change very much. If you have a new product you want to bring to market, takes about 36 months before somebody will actually see it, because your sales team has to sell to the insurer, the insurer has to sell it to employer, employer has to roll it out to their employees. And each one of these steps happens once a year.
So, it’s just a wild hurdle for most large companies in that space to iterate quickly. And then obviously, going back to the lawyers, and the rest of the people that are telling them no, they can’t do this because of whatever reason. And in many cases, they are valid reasons. But when it comes to digital products, the name of the game is speed and iteration cycles. The faster you move, you’re more likely to win. The more shots at goal you have, the more likely to win you are.
And what we learned was, we had to come up with other ways to do it. So this is when I was coming out of Zynga where we would launch something and then maybe an hour later, 10 million people may have used it, which was wild. You know definitively how many people clicked on something or not, out of 10 million people. There’s no question if it worked or not. Then going into this three, four year lifecycle environment, which was just a totally different ballgame. And what we learned was they had to come up with other ways to do it.
So, what we would do is build landing pages, for example, like we talked about earlier, where people were signing up for something. They’re not giving up any personal information so it didn’t have to be as tightly controlled, but they don’t necessarily know that. And then only one part of the website would be active. So we would drive, at that point, hundreds of 1000s of dollars of traffic and split test. Will people respond to this module or that module? If we’re asking questions, are people more comfortable with a background image being that of a doctor, a nurse, somebody fit, somebody sitting on their couch, some abstract image, cartoon image, whatever. And then you iterate, and you iterate, and you iterate. And what we learned, for example, is specific takeaways, if I’m asking you questions about your health and there’s a picture of a doctor or the clipboard, male or female, doesn’t matter, you are not going to answer.
The hypothesis was, this will put you into a mindset where you’re more likely to feel okay because it’s almost like that person is interviewing you. And we got on average, three or four questions that people would answer. And then when you flip it to, all right, there’s a person running, if the person’s doing something happy and healthy in the background, there’s an aspirational objective there. All of a sudden, that three or four or five questions turn into 15, 16, 17 questions that people would answer on average, with no other change.
And we didn’t have to build all this stuff to figure that out, it was literally a fake website with one active module. And that pretty much anyone can do without much coding experience on their own right now. And there’s even tools, this is 10 years ago, so there wasn’t a lot of tooling around it, but there’s all kinds of A/B testing platforms and usability tests that you can run, and all kinds of tools like Alpha that you can use to really figure out is this something people will do or not?
Nathan: You can use Google Optimise, it’s free. You can run up to five tests. You don’t have to spend money even.
Nathan: This was awesome, man. You’ve been very, very generous with your experiences on building incredible products, and you’ve had a lot of success. We have to work towards wrapping up. Is there anything else that you’d like to share around for anyone that wants to start a company now and make it successful during a time like this?
Thor: Yeah. A couple of things. First one is really starting with that aspirational vision and clearly articulating it so that it’s like, definitely less than 10 words, ideally, less than five words. Once you have that and you start building a team, building momentum, building interest, reach out to people, reach out to me. I’m happy to help anybody that’s going through this. And I do this all the time. And by the way, I’ve said this well over 100 times, usually put my email up in a slide or at a presentation somewhere where it’s 1000s of people. And probably less than 20 people have ever done it. So happy to say reach out and I know that nobody will.
Which goes to the second point, just do something, even if that is emailing me or emailing your friends or emailing anybody. Just do something. Try to create a biassed action because you’ll never have the answers, everything is against you, you’ll hear a bunch of noes, there’ll be really tough days. And you can read about it from, other guests on this podcast have written and talked extensively about how difficult a lot of this stuff is. It’s true, but it doesn’t matter, because at the end of the day, the alternative is having a great high paying job for most people, most people that are founders, the alternative is working in investment banking. Poor you. Just do it, and everything will be fine one way or another. And once you have that in the back of your head, and you understand, then you can start doing more and more and more.
So, reach out to people with your vision, share it, get feedback, talk to people. And then through that, they will start introducing you to other people. They will say, oh, you know what, Nathan, I can’t help you, but my buddy Joe or Susie, they would be great. And they just got laid off, and they have six months severance and they’re looking for a project. So the more you talk about it, the more likely it is that those kinds of connections will come up. And that’s where you’d use a tool like Strata, of course, to manage all that.
But doing something, getting people involved, getting people engaged, building a community of people that share your vision and want to make it true, I think that’s really the fundamental bottom line here for any advice to anybody. And it doesn’t matter if it’s COVID or not, it doesn’t matter. None of it matters. Just do something and you’ll learn so much along the way. And COVID and other catastrophes will actually happen and then go away, and things will go back to normal, and the world will change. And that’s okay. That’s an inevitable fact.
Nathan: Yeah, you can only control the controllables. Amazing, man. Well, look, thank you so much for your time. Really appreciate it. Last question is where’s the best place people can find out more about yourself and your work?
Thor: Yeah, so strata.cc is where we’re posting a bunch of stuff. And then just [email protected] is where they can reach out. That’s probably the easiest.
Nathan: Thank you so much for your time. I hope you have a great rest of your evening. Really appreciate it.